The Impact Study On Accounting Conservatism To The Inefficient Investment Of Private Listed Companies

As one of the basic principles of accounting, conservatism principle has already existed in accounting theory and practice for centuries. Since the outbreak of the2008global financial crisis, accounting conservatism principle has been further attention. The Third Plenum of the Party of the eighteen emphasized China’s private enterprises and state-owned enterprises had equally important position. The meeting put forward the idea of "three equal", which equal rights, equal opportunities, equality rules, and required to develop the mixed ownership economy actively. Private enterprise is becoming the foundation of the national economy and an important part of the socialist market economy. It is an important force to promote the development of social productivity now. However, in currently, China’s private enterprises are still many obstacles in the development process, private enterprises still have a lot of unfair treatment. In addition, due to the existence of transaction costs, taxes and other reasons, the reality of the capital markets could not have been run in perfect condition. Private listed companies will generally facing over-investment or under-investment and other investment risks, it is an important problem facing China’s private enterprises, and also a focus attention of the majority of scholars. Some researchers found that accounting conservatism principle can improve the efficiency of non-listed companies’ investment in China, on the one hand accounting conservatism suppresses the over-investment phenomenon, and on the other hand, it can also suppress the under-investment phenomenon. But the current object of the study is all listed companies or state-owned holding company, there are few studies carried out for private listed companies. What will be the impact of accounting conservatism to non-efficiency investments of private listed companies in China? How to use this principle to better improve the investment efficiency of private enterprise and reduce the incidence of inappropriate investment behavior? This study is particularly important theoretical and practical significance in the current.This article is divided into five parts:The first parts is an introduction, introduces the research background and significance of accounting conservatism and inefficient investment of private enterprises at home and abroad are discussed and summarized; Second part introduces the accounting conservatism and the inefficient investment, then studied the theoretical basis of inefficient investment in private enterprises; and then research on the theoretical basis of accounting conservatism and inefficiency investments; Based on the previous theoretical analysis, the third part introduces the concept of private enterprise, development process and the private enterprise investment’ issues and reasons, analyzes the mechanism of accounting conservatism efficiency of private investment in non-listed companies. The forth part selects data of the2010-2012Chinese private Listed Companies, the mechanism of inefficient investments is based on Richardon(2006) residual model, and the mechanism of accounting conservatism is based on Govoly、Hayn(2000) accrual-based method, and then this part tests the relationship between accounting conservatism and over-investment, accounting conservatism and under-investment the linear by regression model. The fifth part on the basis of the fourth part of the empirical analysis described in this article the main conclusions of the study and put forward relevant policy recommendations for private listed companies’ inefficient investment.The innovation of this paper:1、Domestic and foreign scholars on a single level of corporate inefficient investment and accounting conservatism theoretical study is more abundant, but the combination of the two in-depth research has been relatively scarce. Domestic scholars generally analyze inefficient investment of private listed companies from corporate governance, the quality of accounting information accounting information transparency. This paper chooses a new perspective of accounting conservatism to study private listed companies’ inefficient investment.2、Select2010-2012private data of listed companies, the sample is further refined by the level of economic development, in order to research the different levels of influence between accounting conservatism principle and inefficient investment.