Differences in government accounting conservatism across jurisdictions, their determinants, and consequences: the case of Canada and the United States

Abstract We use the year-end adjustments to provisions for student loan losses of state and provincial governments in United States Canada study government accounting conservatism how it varies between these adjacent highly integrated countries. Building on Canada’s more conservative cultural attributes, we hypothesize find that Canadian report than U.S. governments. Moreover, are excessively conservative; they larger audit materiality threshold. further political ideology government, reporting incentives, debt, competition important determinants conservatism. Finally, a negative association adjustment provision future lending. This result suggests leads credit rationing significant societal consequences students. Overall, our highlights aspects To best knowledge, this is first examine unconditional