Research On The Impact Of Corporate Governance Structure On Accounting Conservatism

In view of China’s capital market at present is not perfect, the principal-agent problem among various stakeholders is still outstanding, and the phenomenon of benefit expropriation appears from time to time. As a result, how to reduce the company’s degree of information asymmetry and agency cost becomes a emphasis in both theory and practice fields. The accounting information, which is the product of the process of corporate governance, is the main information source of stakeholders’decision-making need. The conservative accounting information undoubtedly plays an irreplaceable role in reducing the company’s business risk and protecting the interest of investors and creditors. Corporate governance structure, which is an important part of corporate governance, is necessarily one of the key factors that affect the accounting conservatism. So the study of the relationships between factors of corporate governance structure and accounting conservatism, and the suggestions of improving corporate accounting conservatism based on empirical results are very valuable, which is helpful to reduce the degree of information asymmetry.This paper selects data of Chinese A-share non-financial listed companies from 2007 to 2011, which should get rid of ST companies, companies containing B share or H share, and companies with unknown ultimate controller. C-Score model, which is introduced by Khan and Watts(2007), is adopted here to quantitatively measure the relationship between corporate governance structure and accounting conservatism. Empirical results show that both equity balance degree and two duties syncretic have a significant positive correlation with accounting conservatism, but enterprise nature, ownership concentration and board scales have a significant negative correlation with accounting conservatism. Meanwhile, the empirical analysis also indicates that the proportion of independent directors have no significant correlation with accounting conservatism. According to the outcome of empirical research, we consider that reducing government intervention, rationalizing equity structure and perfecting the independent director system can be used to improve the level of accounting conservatism.Conservatism is not the only measure of the quality of corporate accounting information. Conservatism is just the requirement of accountability view, but decision usefulness view stresses timeliness more. However, sometimes there is a conflict between conservatism and timeliness. There still have a great space to explore how to balance these two quality requirements of accounting information.