In this paper, we examine the role of firm heterogeneity of earnings in measuring accounting conservatism. Prior studies have documented the extent of accounting conservatism (in the form of the asymmetric response of accountings earnings to news) and its tendency to increase over time. However, many of these studies implicitly assume that unobserved firm-specific characteristics (known as firm heterogeneity or firm-specific fixed-effects) are unimportant to earnings determination. We find that after allowing for firm-specific fixed-effects in the earnings determination, (i) the level of accounting conservatism is smaller in magnitude than previously documented, and (ii) conservatism does not increase monotonically over time as has been claimed in prior studies. Our results echo recent studies that call for firm-level measures of conservatism, and emphasize the importance of allowing for firm heterogeneity in measuring accounting conservatism.