"IFRS and MENA YEAREuropean accounting practices were generally based on historical cost and focused onaccounting transaction, underpinned by the concept of realization, under which profitswere not recognized until they were, realized (ERNST & YOUNG (2005)). The valuationmethod promoted by the IASB, in accepting the UK GAAP and Dutch GAAP. Many articles have provided empirical support on accounting choices based on positiveapproach (DUMONTIER and RAFFOURNIER (1998), MISSONIER-PIERA (2004)).Their results have generally proved that proxies like size, leverage, ownership structure,management compensation can explain and predict accounting choices. The firstadoption of IFRS is an exceptional time of accounting choices, so we want to test priorresults on this particular period. The IASB introduces fair value method in severalstandards but “the IFRS don?t require all assets and liabilities to be measured at fairvalue” CAINRS (2006). The following standards were noted as requiring assets or liabilities to be measured at fairvalue in certain circumstances: IAS 11 - Construction Contracts, IAS 16 - Property, Plantand Equipment, IAS 17 – Leases, IAS 18 – Revenue, IAS 19 - Employee Benefits, IAS20 - Accounting for Government Grants and Disclosure of Government Assistance, IAS26 - Accounting and Reporting by Retirement Benefit Plans, IAS 33 - Earnings perShare, IAS 36 - Impairment of Assets, IAS 38 - Intangible Assets, IAS 39 - FinancialInstruments: Recognition and Measurement, IAS 40 - Investment Property, IAS 41 –Agriculture, IFRS 1 - First-time Adoption of International Financial Reporting Standards,9 IFRS and MENA YEARIFRS 2 - Share-based Payment, IFRS 3 - Business Combinations and the June 2005Exposure Draft, IFRS 5 - Noncurrent Assets Held for Sale and Discontinued Operations4AMF, 30 December, 2003: The particularity of the research is the choice of conservatism as a discriminated criterionto explain accounting choices. The research question is summed up as follows: How canthe PAT –used in the conservative perspective- explain fair value accounting choicesmade by French firms during the first time adoption of IAS/IFRS standards? It must benoticed that the French accounting environment differs from the USA (which is the maincontext studied by the PAT), especially regarding the importance of the tax law contextand the conservatism. Moreover, the first time adoption of IAS/IFRS is an exceptional period of deep changesin accounting practices in a short period. The PAT is mostly used for testing accountingchoices in a long period in stable environment. That is why this paper aims to test theexplicative weight of the PAT in the particular context of the first introduction ofIAS/IFRS in France. This study contributes to the current state of accounting research by investigating theIFRS? first time adoption from a classical use of the PAT hypothesis. Indeed, the retainedhypothesis, link accounting choices to the characteristics of the firm such as: size,leverage, CEO?s compensation, ownership structure and cross-listing. The empirical10 IFRS and MENA YEARmethod uses a LOGIT regression to test the explaining capacity of proxies on theobserved accounting choices. The remainder of the paper is organized as follows. In section one, we specify thetheoretical background: the PAT, conservatism and fair value. In section two, we give anoverview of IAS/IFRS standards. The third section develops the sample, theconservative?s choices and the hypothesis. Section four presents the statistical methodand the results. And last we conclude by summarizing the main findings and discussingthe implications. 1. Conceptual background In this section we will present the conceptual background. Firstly, we briefly present thepositive accounting theory then a survey on conservative literature is made and lastly thefair value concept is presented. 1.1. The positive accounting theory The positive accounting theory is considered as the mainstream in accounting choicesresearch realm. JENSEN (1976) asserts that “the PAT is managed to explain whyaccounting is what it is, why accountants do want they do and what effects thesephenomena have on people and resources utilization”. WATTS and ZIMMERMAN(1990) assert that “the accounting theory?s role is to provide explanations and predictionsfor accounting practices”. According to COLASSE (2000) the PAT interferes either onthe level of standards setter or on the firm level when standards setter let the choice11 IFRS and MENA YEARamong several options. The observation of the first time adoption of IAS/IFRS?s optionsis located on this second issue. BELKAOUI (1992) asserts that “the central ideal of thepositive approach is to develop hypotheses about factors that influence the world ofaccounting practices and to test empirically the validity of these hypotheses”. Studiesfollowing this trend “studied statistically the relationship between an accounting choicemade by company and characteristics of firms” (CHIAPELLO and DESROSIERES(2003)).Positive studies are often based on observations of the application of a single methodchoice (e.g. LIFO or FIFO method, R&D recognition). Besides WATTS andZIMMERMAN (1990) notes that the focus on a sole accounting choice can reduce theexplicative power of tests. In our case, it?s a portfolio of choices which is studied. ThePAT developments are mostly American, and few studies are devoted to Europeancase6.That is why JEANJEAN (1999) brings to light that positive research hypothesesare strongly linked to the American background. The first time adoption of IAS/IFRSstandards is a huge change on French accounting practices in a very short period. So wecan question the “universality of this theory” RAFFOURNIER (1990). The study integrates the positive theory background. Consequently we estimate that thistheory must be tested in the particular context of the first time adoption of IFRS?. Is thePAT relevant on the particular case of French transition to IAS/IFRS? In order toestimate explicative capabilities of the PAT during the first time adoption period, we aregoing to follow strictly the classical operating way. However, we introduce an original12 "