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The British Accounting Review
Article . 2026 . Peer-reviewed
License: CC BY
Data sources: Crossref
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SSRN Electronic Journal
Article . 2021 . Peer-reviewed
Data sources: Crossref
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Does Options Trading Reduce the Demand for Conditional Accounting Conservatism?

Authors: Mahmoud Delshadi; Ahmad Hammami; Michel Magnan;

Does Options Trading Reduce the Demand for Conditional Accounting Conservatism?

Abstract

We examine if options trading via organized markets reduces conditional conservatism by alleviating information asymmetry and by mitigating the shareholders-manager conflict. We build upon and extend prior evidence that options trading enhances stock market informational efficiency. Focusing on a large sample of firms from 1997 to 2019, we show that options trading is associated with less conditional conservatism in financial reporting. Moreover, firms reduce their level of conditional conservatism after being listed on the options market. Options trading’s effect on conditional conservatism is greater among small firms, firms with low asset tangibility, and firms with long investment cycles. We find that options trading has little or no effect when economic policy uncertainty is high. We observe that the presence of financial analysts strengthens the negative association between options trading and conditional conservatism. We also document that options trading prominently influences conditional conservatism when investor sentiment is high.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
1
Average
Average
Average
hybrid