Accounting Conservatism And Corporate Governance

Based on the two accounting system reform in 2000 and 2006, this paper investigates the accounting conservatism in Chinese listed companies, and the impact of corporate governance has on accounting conservatism. Using data of A-share listed companies from 2001 to 2007. we investigates whether there is accounting conservatism in mainland of China, and whether it changes after the two revolutions. Except for the impact of accounting standards, we also checks the influence of corporate governance has on accounting conservatism. The results indicate that during 2001 to 2007, the accounting conservatism exists in Chinese listed companies, and it appears differently in different year: Since the new accounting standard in 2000 came true, the level of accounting conservatism in Chinese listed firms had totally increased from 2001 to 2005. However, it became decreased since 2006, for the outcome of new accounting standard in 2006, which emphasizes more on fair value. There is also further evidence to support that corporate governance has positive impact on accounting conservatism. Firms with higher level of corporate governance have higher level of accounting conservatism. On the contrary, for firms with lower level of corporate governance, the accounting conservatism becomes lower, too.