The Study On Accounting Conservatism And Investment Efficiency

Investment decisions are very important to corporate financial decisions, it affects not only the company’s future business risks but also shareholders’ value, it even will affect the overall social efficiency of resource allocation.But the age-ncy conflicts,information asymmetry and managers’ irrational behavior problems may lead to over-or under-investment corporate investment,both of them can be defined as non-efficiency investment.Non-efficiency investment w-ould damage the interests of stakeholders and the corporate value.It is so significant studying how to improve the efficiency of corporate investment.Accounting conservatism has effected accounting practices have a profound for a long time.It is considered to be as an important qualitative characteristics of accounting information,and can take positive economic consequences. On this basis,this paper focuses on the accounting conservatism whether can play an active role in improving the efficiency of investment.This paper firstly review the domestic and abroad research on the relationship between accounting conservatism and investment efficiency (over-and under-investment).Then analysis the relationship based on the Principal-agent theory,Asymmetric Information theory and Behaviorial finance theory. Furtherly combine accounting conservatism with the corporate mechanism, research the shareholding structure’effects on the relationship.This paper uses the Khan and Watts (2009) Cscore exponential model to measure accounting conservatism and use Richardson (2006) model to expect investment efficiency.On this basis establish the linear regression model about the accounting conservatism and investment efficiency.Then use A-share listed companies’data from2008to2012,test the hypothesis of this paper according to the regression analysis results.The empirical results obtained the following conclusionsthrough this paper In the case of excessive corporate investment, there is a negative correlation between accounting conservatism and over-investment,accounting conservatism can suppress corporate excessive investment.But in the case of insufficient corporate investment,accounting conservatism also exacerbate underinvestment. A high degree of ownership concentration will weaken the relationship between between accounting conservatism and over-investment, it is difficult to play its role in suppressing excessive investment for accounting conservatism.