Background: Investors does seldom use the information provided within the notes when making investment decisions even though it is evident that notes impact the organisations share price. The reason is unclear, though hypothetically it is possible that the unawareness of potential advantages and disadvantages might be the problem. Thus, this report will aim to increase the investors and other stakeholders’ knowledge by measuring the Attention to Detail in organisations notes. Attention to Detail is in this report a measure proclaimed to align with the conservative accounting which then will measure the degree of detail the organisations’ display. Purpose: The purpose is to develop a measurement for ‘Attention to Detail’ and thereafter try to investigate what explains the Attention to Detail within the notes. Thus, the research question is stated as follows: What organisational factors impact companies’ Attention to Detail in their notes? Method: This report applies a deductive and positivistic approach where accounting theories are used to formulate hypothesises. The theories used are PAT/Agency Theory which participated in constructing two hypothesises regarding variable compensation and financial leverage, the Upper Echelon Theory that contributed to establishing a hypothesis concerning women in top position and the Institutional Theory that sympathised in the creation of industry differences hypothesis. A qualitative approach was conducted where data from a total of 175 firms was collected from their 2019 annual reports. To be able to investigate if the hypothesises established had any significant relationships with Attention to Detail, a Pearson correlation and Regression analysis was created.  Conclusion: It was found that financial leverage and different industrial sectors had a positive relationship towards Attention to Detail. It could also be concluded that the Institutional Theory had an explanatory power over the outcome of all the hypotheses and therefore is the most prominent accounting theory to explain the application of detail, in this study.

Prior research on conservative accounting and bondholder-shareholder conflict show that firms with higher degree of conservatism experience less austere conflict and lower cost of debt. However, since the implementation of IFRS in 2005, conservatism has been widely reduced in favor of fair value principles. This study sets out to examine if accounting conservatism still mitigates the conflict and reduces cost of debt. We regress two measures of conservatism on three conflict proxies and debt cost, respectively, for firms on the Norwegian market. Our results support the conclusion that conservative accounting mitigates the bondholder-shareholder conflict even after the introduction of IFRS, but we find no significant evidence that bondholders reward high level of conservatism with lower cost of debt.

The bias implied by conservatism in accounting and its impact on information risk in equity markets is the subject of considerable debate. On one hand, opponents of conservatism believe that any kind of biased information is actually misinformation and thus increases uncertainty. Perhaps most prominent among opponents of conservatism is the Financial Accounting Standards Board (FASB). The FASB contends that accounting information should be neutral—free from bias; a bias in favor of reporting either good or bad news is inconsistent with representational faithfulness and neutrality. On the other hand, proponents of conservatism point to incentives of management to manipulate financial statements by exaggerating apparent good news and/or hiding apparent bad news. Proponents argue that the bias implied by conservatism is necessary to offset the asymmetric reporting incentives of the firm’s management, and in so doing, conservatism allegedly improves information quality and reduces information risk. Finally, results of at least one recent study do not favor either position, suggesting that conservatism has no effect on information quality in equity market. This study finds that the bias implied by conservatism (bias in favor of reporting bad news) increases information risk in equity markets and consequently the cost of equity capital. Findings further indicate that sufficiently aggressive bias also increases information risk. That is, the market’s most aggressive firms, those reporting with a bias opposite that implied by conservatism, can reduce information risk by moving toward more neutral, unbiased reporting. Furthermore, the general effects of biased reporting (increased information risk) are consistent across all levels of information asymmetry among equity investors. These findings are interpreted as supporting the position of the FASB that biased accounting information increases information risk.