This study investigates whether accounting conservatism which is an important characteristic existing in financial reporting is driven by the four explanations (contracting, taxation, litigation and regulation) in Taiwan. Although these causes of conservatism have been often examined in foreign literatures, few studies explore them for the variation of conservatism in Taiwan. In order to find if the degree of conservatism in Taiwan is influenced by the alternative explanations, I take the market-value-based measure and the accrual-based measure to find the relation between them. Under cross-sectional evidence, contracting is a significant cause of conservatism but for taxation, no obvious evidence supports the stronger tax motivated conservatism is, the higher the effective tax rate is. On the part of litigation and regulation, after identifying their significant changes, two increasing tendencies are both observed in three time trends of conservatism. Overall, I find the three explanations－contracting, litigation and regulation can explain the changes and degree of accounting conservatism in Taiwan listed firms.

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