The Research On The Accounting Conservatism From Perspective Of Institutional Evolution

Uncertainty is the premise of accounting conservatism, while "The world’s most definitive is undeterministic ". As the western financial accounting theory master and accounting principles builder, FASB clearly put forward recognition of accounting conservatism in its financial accounting conceptual framework (1983No.2) that, in the field of financial accounting and reporting, for the possible metering error, the convention is calculator less assets and earnings rather than calculator more of accounting conservatism (that is prudential), because of business and economic activities have uncertain factors everywhere", but nearly30years, FASB which guided by investor’s interests to the first point always think that, Accounting conservatism has a deep-rooted history status, but "Accounting conservatism of preparation of financial statements, should not contain the meaning of calculator less net assets and net profit deliberately and consistently ", otherwise it is a breach of "neutrality". In2008, FASB and IASB issued conceptual framework thoroughly remove accounting conservatism (including accounting prudential) from the frame, but the controversy haven’t stopped till now, because the long history of accounting conservatism illustrate that, it appears not because of approval of formal institution, and do not disappear because of negation of formal institution.Currently, the relevant accounting conservatism topic is in view of financial accounting which takes the capital market as the main service object, the main research comes from American, which have an economic status difficult to shake as well as a brief accounting history. From the view of evolutionary process, the accounting of American originate from British, and the British’s originate from Holland and Italy successively, it involves only the development process of double—entry accounting yet, before double—entry bookkeeping, there are medieval European accounting, the four great ancient civilizations accounting, even the source of accounting, i.e. the original measurement record. Going through such kind of development process, accounting conservatism in the history come into being and evaluate till now, currently, the accounting conservatism discussed by mainstream British and American theory is the tip of the iceberg of a phenomenon of complex institution.For China, the concept of "accounting conservatism" is fully transplant from Western, it is eager to know how the accounting conservatism came into being and evolved to the current status. Since the beginning of establishing accounting institution in1980s, accounting conservatism passively experience three stages, that is from scratch (1983-1997), from weak to strong (1998-2005), and from comprehensive to moderate (2006-present). Every adjustment is because of the negative influence of the old institution,the cost of such passive adjustment is very great. China is different from the United States, the latter is a country with common law system, its institution originate from the customs and practices in the market, so, institutionalized accounting conservatism in essence is the result of spontaneous externalization of internal rules of market operation, the consequence of institution adjustment is digested by system of internal. But China is different, as a statute law country, the social cost of every formulation and adjustment of the institution are huge. Therefore, China needs to take prudent attitude in the transplantation of accounting conservatism institution. But the fact is not the case, the initial application of accounting conservatism principle is the significant performance of Chinese accounting reform in line with international standard, institution builders do not pay attention to the cause and effect of accounting conservatism from a historical perspective. The applicability of the transplanted institution is conducted as acceptance criteria, The above three stage are passive adaption result of Chinese institutional building.When accounting conservatism frequently change in China, FASB and IASB also make a decision to completely remove the accounting conservatism from accounting information quality framework. Chinese institution builders face the challenge of whether to follow under the circumstance of international convergence of accounting standard. What is the accounting conservatism? There is no unified understanding between Chinese and western so far. Since the accounting theory in American is unparalleled in the world, its views deeply influence other countries in accounting industries. The further development of accounting conservatism theory is difficult by the guidance of the FASB’s logic of " Objective—standard—practice",, because the objective is a product of purely subjective, which lack of a logical start point of "subjective effects of objective " to lead the development of the theory, so it must cause the difference of objective and practice. The universality, diversity of accounting conservatism in practice and its deviation of standard setting purpose, lead the limitations of the theoretical study to be solved. Diversity is the motivation of evolution, so from the view of institution evolution, the accounting conservatism theory research has become an important and urgent research subject.In this paper, accounting conservatism problems are studied based on the evolution of institution perspective, focusing on solving three basic problems, One is why study accounting conservatism problems from the view of evolution of institution, another is how to make an evolution analyze, the third is how the research findings make up the deficiency of accounting conservatism theory.Before answering these three questions, we need to use the theoretical basis of accounting and economics in advance. See from accounting research literature, evolution thoughts have been formed since beginning of the modern accounting theory, the main manifestations are early accounting researchers tried to find reasons for difference of accounting conservatism convention from the history, using the criterion of "existence always makes reasonable" to construct standard, such kind of research using causal tracing method has pass out of existence since the using of new classical equilibrium paradigm, heterogeneity and irreversible accounting conservatism convention incorporated into the accounting standard category under the guidance of subjective purpose, it obviously leads to confusion.Differ form the ontology of empirical realism and episternology of individualism held by institutional view of equilibrium, the theory of evolution of institution insist on criticizing ontology of realism and individual group of socialism, assume the main body of the institution has the rational cognition, emphasizes the cumulative causation of the institution and the use of backtracking method, this paper put the historical evolution of accounting conservatism in such an evolution path that is "Instinct—behavior—custom—habits—convention—institution", Upward causal study concludes that the ultimate cause of accounting conservatism is "perfectionism", downward causal study concludes that the diversity of accounting conservatism stems from the interaction between heterogeneous active subject and social structure it lies.Accounting standard setters in recent days consider that the accounting conservatism is "reality" of automatic, repetition, silent, and "no part time". Such accounting standard constructed under the guidance of balanced view, and do not completely conjunct with subjective accounting goal and objective accounting practices. To resolve this problem, the researchers need to change the angle of view from institution equilibrium to evolution of institution. First of all, change the attention of theoretical research from the "accounting order" in balancing view to the "causal mechanism" in evolution view. Through abducts forward to analyze the ultimate formative reason of institution, and backward to analyze how institution restrict individual behavior, Complete implementation of cumulative causation chain logically, Then, this paper reconstructs the accounting conservatism concept, adds a "nature" start point which objective effects of subjective in the theoretical logical sequence of "objective—standard—practice", so that the subjective goal has the objective theoretical basis, and do not dissociate with objective requirement. In the third, this paper points out that the development of accounting must adapt to the needs of the society, so contingency to meet the needs of society is the development direction of accounting conservatism.