... growth. Using option-implied assets, we find that conservatism is priced by investors’ risk aversion (downside risk) rather than the potential upside. Several robustness tests confirm the findings. We also provide evidence that the returns are not driven by mispricing but as compensation for the risk...

... in accounting for such transactions, in particular their option-like features, and discuss how such option-like features appear in many financial contracts. We discuss ways that such difficulties can be addressed and conclude that a purely recognition-and-measurement approach is likely to be problematic...