In this study, we test the effect of financial leverage, remuneration management, operating company, risk of litigation on the application of conservatism principle in accounting of listed companies on the stock market. Using a sample of 699 firm-year in 3 years 2014-2016, our results indicate that three in four factors in the model are significantly related to the application of conservatism principle, they are Remuneration management, Operating company, Risk of litigation. In detail, Remuneration management is negatively related to the application of conservatism principle, Operating company, Risk of litigation are positively related to the application of conservatism principle. Based on the research results, we also propose some quite useful recommendations relating to the application of conservatism principle for state institutions, business owners, users of the information on the financial statements, financial analysts and researchers.
General Jonas Zemaitis Military Academy of Lithuania