The Role of Conservative Financial Reporting in Enhancing Firm Resilience During Financial Crises

Abstract

This study conducts a systematic literature review to explore the role of conservative financial reporting in enhancing firm resilience during financial crises. Drawing from peer-reviewed journal articles published over the past two decades, this review finds that accounting conservatism contributes significantly to crisis mitigation by promoting timely loss recognition and enhancing the reliability of financial statements. Conservative reporting practices reduce information asymmetry, foster trust among external stakeholders, and serve as a buffer against economic shocks. The review also highlights contextual factors such as legal environment, corporate governance, and firm characteristics that moderate the relationship between conservatism and resilience. The findings support the view that conservative accounting acts not only as a reporting mechanism but also as a strategic tool for managing financial risk. Future research is encouraged to examine cross-country effects and integrate environmental, social, and governance (ESG) considerations.

Keywords: Accounting conservatism, financial reporting, crisis resilience, firm performance, financial risk, stakeholder trust.