Accounting Conservatism’s Impact On The Efficiency Of Investment

Investment as one of the modern enterprise major financial decision, is the necessary means for enterprise’s survival and development. However, due to the short time of Chinese market economic system, information disclosure mechanism is not sound, the investor protection system is not perfect, efficiency of investment caused by principalagent problems and asymmetric information problem is widespread. The efficiency of investment will damage the rights and interests of shareholders, creditors and other stakeholders, thus hurting the value of the company. From the macroscopic level, the efficiency of investment reduces the whole social resource allocation efficiency.Accounting conservatism is an important principle in financial reporting, it can effectively alleviate the agency problem and asymmetric information problem, therefore, in this paper,Starting from the perspective of accounting conservatism, studying the accounting conservatism’s impact on the efficiency of investment.This thesis selects 2012-2014 annual reports of A-share manufacturing listed companies in Shanghai and Shenzhen stock markets. Use C-score model to measure the degree of accounting conservatism. Use Richardson model to measure the level of investment. Use descriptive analysis, correlation analysis, and multiple linear regression analysis method to test the accounting conservation principle’s impact on the efficiency of investment. This thesis also studies the actual control properties’ impact on the relationship between accounting conservatism and inefficient investment behavior.The results show that over-investment in manufacturing listed companies in our country is less than under-investment, but its degree is more serious than underinvestment.In our country, manufacturing listed companies accounting conservatism negatively related to the enterprise over-investment, namely, accounting conservatism can alleviate the excessive investment behavior, and compared with the state-owned enterprises, the governance role in non-state enterprises is more prominent. Accounting conservatism positively related to the inadequate investment, and compared with stateowned enterprises, this phenomenon is more significant in the non-state-owned enterprise.