Research On The Function Of The Board, The Overconfidence Of The Administrator And Accounting Conservatism

As our capital market develops, the internal information users, such as shareholders and operators, and the external information users, such as investors, creditors and administration will always make decisions according to the accounting information. Therefore, they require higher quality of the accounting information. However, one important way to measure the quality is the accounting conservatism. Because of the overconfidence from the managers, who trust their own abilities, they will over-estimate their ability and possibility of success, but take no notice of the risk to lose. All of these factors will have an influence on the quality of the information and also the accounting conservatism. Meanwhile, the overconfidence of the administration also affects a series of decisions for the corporation.This text is based on the former documents and takes Stock A private listed companies during 2011-2014 as an example. The study focuses on whether the overconfidence of the administrator will influence the Accounting Conservatism by dividing it into non-conditional and conditional Conservatism and build up the Accrued Cash Flow and Net Book Value Ratio models. On this basis, it also studies the ratio of independent directors, frequency of annual meetings, and the separation between president and general manager which also has some effects on the relationship between the overconfidence and Accounting Conservatism.Based on the previous research, I do it with the help of STATA software by counting variates, correlation analysis and MLR. The results are as follows:the overconfidence has a passive influence on the conditional Accounting Conservatism, but not on the non-conditional. Increasing the ratio of independent directors will weaken the negative correlation between the overconfidence and non-conditional Accounting Conservatism. Increasing the frequency of annual meetings has an inhibiting effect on the negative correlation. The separation between president and general manager will weaken the negative correlation between the overconfidence and the conditional Accounting Conservatism. Therefore, the targeted suggestions will be beneficial for the construction of the developmental Chinese Security Market and making policy in supervision departments. It will also help the board perfect the supervising system to make them work better and more efficient for the stockholders, creditors and other groups of the related interest.