The Impact of Economic Growth Fluctuations on the Level of Accounting Conservatism

Accounting conservatism underpins the reliability of financial reporting, yet how it responds to macroeconomic fluctuations remains under-examined in emerging economies such as Algeria, whose economy experienced sharp swings during 2012–2023. This study aims to examine whether economic growth fluctuations affect the level of accounting conservatism in Algerian companies. It uses an unbalanced panel of 120 non-financial companies (1412 observations), measuring conservatism by the non-operating accruals model and economic growth by the annual GDP growth rate, with company size, leverage and profitability as control variables. The results show no significant effect of economic growth on accounting conservatism. Conservatism is instead shaped by company characteristics: larger companies are less conservative, whereas more leveraged and more profitable companies are more conservative. The study provides the first evidence on this relationship in the Algerian context and indicates that company-level factors, rather than macroeconomic conditions, drive accounting conservatism.