Analysis Of The Impact Of Industry Competition On The Earnings Conservatism

Accounting conservatism is one of the most important accounting informationquality standards. The formulation of standards designed to protect corporate interestsof stakeholders, control the information distortion risk and standardize enterprisebehavior. Currently, academic circles research the problem of accountingconservatism from the views of internal corporate governance structure, ownershipstructure factors of enterprise and so on. Basu (1997) considered that the conservatismmeans accounting responded more promptly as to economic loss. Beaver (2005)called this the earnings conservatism. Based on the existing researches, this articlechoosed industry competition quantitative index as research variables, attempted toanalyze accounting conservatism from the external environment perspective ofindustry competition. Then, draw the conclusion and put forward relevant measures inorder to eliminate the influence of industry competition on the accountingconservatism, so as to improve the quality of accounting information.In the first part of the research, I elaborated the background and significance ofthis article, reviewed the research results at home and abroad, and explained theresearch ideas and methods. At the same time pointed out possible innovation in thisstudy. Secondly, defined the connotation of accounting conservatism, competitionindex of the industry, and sorted out the asymmetric information, principal-agenttheory, and stakeholder theory. Thirdly, referred the use of the Basu model and itsimproved model, instructed the relevant variable indexes. Used "The SFC to Chinalisting Corporation industry classification guidance" as the basis, the ListingCorporation divided into twelve parts. Then, selected the variable data of2011-2013,verify the hypothesis of this paper through descriptive analysis and regressionanalysis of the assumption. Finally, the paper summarized the research conclusion,and based on the conclusion proposed related measures which be used to weaken oreven eliminate the unfavorable influence of industry competition on AccountingConservatism, also described the the limitations of the present study, and the prospectof future research directions.In this paper, through the study we can found that the degree of competition indifferent situations, the influence on accounting conservatism is different. The degreeof competition in the inverted U type associated with the accounting conservatism, the fierce competition in the industry and low degree competition are not so good as tothe accounting conservatism of enterprises. Only the competition is moderate, theconservatism best.Based on the former conclusion, we know that to ensure the accountingconservatism and ensure the high quality of accounting information, keeping theappropriate degree of industry competition is needed. So I put forward the followingsuggestions:(1) not only the macroeconomic regulation and control is needed tostrengthen the supervision, but also the market mechanism is needed to let the marketchoose the enterprises;(2) continue to improve the CPA’s external supervisionmechanism;(3) improve the cost of false accounting information and increasepenalties;(4) moderate dispersed ownership concentration level;(5) perfect enterpriseinternal accounting supervision system...