Accounting Earnings Conservatism From The New Accounting Standards

With the development of stock market, accounting information plays a more important role in modern life; the accounting information disclosure has become an efficient way for external investors to look into the listed companies. Accounting earnings are important indicators for investor in decision-making, in order to protect the interests of investors, further, the decisions which made by investors should be based on viability rules. Accounting earnings should possess feature of conservatism. Therefore, conservatism accounting earning has become an important characteristic of accounting information quality in financial accounting, and guiding the accounting principles and regulations. Since January 1,2007, the new Accounting Standards are implemented by listed companies in China, after the implementation, a scientific and timely evaluation of affection to accounting earning conservatism of the listed companies has practical significance for accelerating the implementation and improvement of new guidelines. Under this circumstance, this paper makes an empirical analysis on financial data with implement of new accounting standards. Evaluate to what extent the new standards have impacted on accounting earnings information quality of public companies, from the perspective of earning conservatism, in order to accumulate experience for changes in the accounting principles.First of all, a theoretical explanation for the content of accounting earnings conservatism is given by this paper. Moreover, it is analyzed the impact from new accounting standards on accounting earnings stability theory. It is found that new accounting standards have changed the practice of blindly reinforce stability from the past, more emphasis on accounting principles of "moderate stability ", in particular, the accounting earning conservatism has been strengthen in some fields whereas weaken from some other aspects. On the base of theoretical analysis which made by "2005-2009 Shanghai A-share Stock Exchange listed companies in five years" as a sample, the sample companies are divided into two groups of profited and loss, verified the affection from new accounting standards on accounting earnings stability of listed companies with the " surplus-stock returns model ". It is found that from the empirical study, moderate change of stability principle in new accounting standards makes the listed company's earnings conservatism declined. Further, due to the implementation of new accounting standards, loss company still exist accounting earnings stability, however decrease; the accounting earnings stability of profited company increased, but still, no stability. In conclusion:Although the earning conservatism still be an important requirement with accounting information quality by new accounting standards, however, due to the stability is a secondary requirement, new accounting standards focus on "true and fair " of accounting information. Thus, when the stability principles conflicted with other accounting information quality requirements (such as "Relevance") are contradicted, the stability principle would" give way "to other principles, obviously to find that accounting earnings conseirvatism plays a much weaker role in new accounting standards, which means financial reporting will be less stability under the new accounting standards. Compared the earning conservatism changes of public companies which influenced by the implements new accounting standards, it could be found that, the main factor which affects the accounting earnings conservatism of listed companies is accounting control, which means the changes that accounting standards required for the stability might make the extent of accounting earnings conservatism of listed companies make structural changed in different periods.