A Study On The Impact Of Accounting Conservatism On Corporate Investment Efficiency

Accounting conservatism, an important principle of accounting process, which can provide a reliable corporate financial information and relieve agency conflicts and information asymmetry problems between internal and external stakeholders. The new accounting standards issued in 2007 clearly defined that the accountants must keep caution, neither overvalue assets or income, nor underestimate liabilities or expenses for the corporate financial reporting in accounting matters and transactions. The use of accounting conservatism gone from weak to strong in different periods, accounting conservatism is pulled back to the vision of academics until the outbreak of the financial crisis in late 2008, people began to balance the reasonableness use between fair value and accounting conservatism, accounting conservatism began favored by the majority of scholars, welcomed a research upsurge. Investment, refers to capital investment in order to obtain certain benefits, which is one of the most important economic activity, play a very important role for the future development prospects of the enterprises, therefore, enterprises in pursuit of efficient investment. Agency conflicts, internal and external information asymmetry and the irrational behavior of management often leads companies fail to achieve high efficiency in the investment process some inefficient investment performance that is over-investment and under-vestment in two ways. Thus, how accounting conservatism affects over-investment and under-investment? This paper will be based on the perspective of efficiency investment to study the economic consequences of accounting conservatism.This paper reviews the related research literatures about accounting conservatism and corporate investment efficiency, analyze the impact mechanism of accounting conservatism on corporate investment efficiency on the basis of the principal-agent theory, asymmetric information theory and behavioral finance theory, selects listed companies in Shanghai and Shenzhen stock markets from 2012 to 2014 as the research sample, using the methods of variables analyzing and multiple linear regression analyzing, verify that accounting conservatism exists in our emerging capital markets, which is the basis of studying accounting conservatism on corporate investment efficiency. In the process of research, over-investment and under-investment as the dependent variable, the conditional conservatism indicators Cs and unconditional conservatism indicators Mb as independent variables, both Basumodel and K-W model are used to conform that accounting conservatism exists. we draw the following conclusions: first, in our emerging capital markets, accounting conservatism is widespread; second, accounting conservatism can alleviate over-investment behavior and improve investment efficiency; while accounting conservatism to some extent, will lead to under-investment, reduce investment efficiency.This paper discusses the impact of accounting conservatism on investment efficiency from the conditional conservatism and unconditional conservatism, not only the analysis in-depth of accounting conservatism, but also provides more reliable and comprehensive empirical evidence for economic consequences of accounting conservatism on investment efficiency, put forward constructive and instructive policy proposals to help listed companies for efficient investment and make the most favorable investment decision.