Impact Of Corporate Governance On Accounting Conservatism

Modern corporate governance structure is an important part of the accounting standardsexecutive mechanism, which have a significant impact on the quality of accountinginformation, accounting conservatism is an important part of the quality of accountinginformation, the target of corporate governance and quality of accounting information isinherently coincident. The value of this study is that we chose the GEM-listed companies asthe object, and empirical test the impact of corporate governance factors on accountingconservatism, and analysis the method of companies listed on GEM how to improve therobustness of accounting information by adjusting the corporate governance structure.This paper selects companies listed on GEM in2010-2012as sample, we use the reverseregression surplus proposed by Basu (1997), and adds the shareholding structure, boardcharacteristics, debt financing, incentives and other executives variables in this model,empirical tests impact of corporate governance on accounting conservatism, analyzes theinfluence of each factor on accounting conservatism. The conclusions are:(1) Shareholdingconcentration negatively correlated with accounting conservatism, that the higher Theshareholding ratio of the largest shareholder, the more likely they manipulate the choice ofaccounting policies and the disclosure of accounting information, which affects theaccounting information conservatism level;(2) The unity of two roles-chairman and generalmanager negatively related to accounting conservatism, that the conservatism of accountinginformation of listed companies is better if the two roles is separate; proportion ofindependent directors positively correlated with accounting conservatism, that the biggerproportion of independent directors, the more likely to provide a conducive healthy long-termdevelopment proposal when company need to make decisions;(3) The correlation betweenthe level of debt and accounting conservatism is not significant, because few companies listedon GEM is state-owned enterprise, they have little chance to get long-term loans, the level ofborrowings is low;(4) The correlation between the executive compensation incentive andaccounting conservatism is not significant, executive equity incentive and accountingconservatism positive related, that executives hold more shares, the stronger accountingconservatism.This paper aims to study the impact situation of various internal corporate governancefactors on accounting conservatism, the perspective is original. At the same time, adds animportant factor-executive incentive in this paper, analyzed the impact of compensation incentive and equity incentive on accounting conservatism of companies listed on GEM, findthat the proportion of executive equity positively correlated with accounting conservatism,we believe that if executives own more equity, they will think more about the long-terminterests the company, and will chose more moderate accounting behavior.