Managerial Power,Institutional Shareholding And Accounting Conservatism

The principle of accounting conservatism,as a research hotspot in the accounting field,is one of the m ost important principles of accounting measurement.The scholars' concern on this issue is long-standing and enduring.Besides,the research focus on this issue has switched from initially the measurement problem to the analysis of the factors affected and its possible econom ic consequences.In this paper,it is used as an explanatory variable,trying to study how managerial power and institutional investors' shareholding ratio affect the accounting conservatism.As an im portant part of the corporate governance st ructure,under the typical structure of the m odern enterprise,where the ownership and m anagerial rights are separated from each other,when the managerial power surpasses the absolute power of the board of directors and the shareholders,whether the management has the motivation and possibility of m anipulating accounting information quality and therefore cause the negative impact on accounting conservatism have also attracted th e attention of scholars.As another im portant part of the corpor ate governance structure,with the steady increase in the proportion of institutional investors holding shares in listed companies in recent years,the du al identity of institutional investors,both shareholders and professional institutions,has dr iven scholars to believe that institutional investors has potential in governing the enterprises.Besides,one of the innovations of this paper is to study whether the shareholding ratio of inst itutional investors can suppress the negative influence of managerial power on accounting conservatism.This paper analyzes the relationship of those three m entioned above,nam ely managerial power,ownership of institutional investors and accounting conservatism.In addition the main conclusions are listed as followed:(1)There does exist accounting conservatis m in the earnings of Chinese listed companies;(2)Managerial power is negatively correlated with accounting conservatism,that is,the company with centralized management has lower accounting conservatism;(3)The pro portion of ownership of institutional investors can inh ibit the negative impact of management power on accounting conservatism.Thus,this thesis proposes five corresponding policy suggestions:(1)Improve the internal power structure of the company to avoid the concentration of executive power;(2)Introduce institutional share holders to participate in corporate governance,also enhance the discourse power of shareholders;(3)Enhance the independence of directors an d the board of supervisors,convert the function of corporate governance for the aim of more independence and profession,thus the supervisory role works;(4)Continue to play the active role of accounting conservatism.