Research On The Influence Of Accounting Conservatism On The Financial Constraints

As the oldest and the most deeply rooted principles,accounting conservatism have influenced the corporate accounting practice for at least five hundred years.Accounting conservatism reflects the cautious on the future uncertainty,when it typically appears as the undervaluation of net assets,and the deferential variability required for recognizing of profits versus losses.Previous studies have shown that accounting conservatism could ease the conflicts in principal-agent problem,improve the completeness of debt contracts,as well as reduce the information asymmetry,and deliver the risk signals of the market.So,accounting conservatism help creditors reduce their risks.If the risk compensation of creditor is reduced,there will be more willing for them to provide low rate loan,then corporate get more chance to relieve the financial constraints.At present,Chinese scholars pay more attention to the correlations between accounting conservatism and financing cost or the efficiency of investment,but few scholars have ever studied the influence of accounting conservatism on the corporate financial constraints.As the global financial crisis has deepened and spread,commercial banks began to strengthen the supervision on credit fund to reduce risk,and it's become more and more difficult for corporate financing.This paper plans to investigate the role of accounting conservatism under the financial constraints from conditional and unconditional conservatism view,and try to find a solution to ease the corporate financial constraints.The main research method of this paper is the combination of theory research and empirical research.On the base of previous studies,the paper divides the accounting conservatism into conditional conservatism and unconditional conservatism,and analyses the role of accounting conservatism under the financial constraints on the basis of MM Theory,Incomplete Contracting Theory,Principal-Agent Theory,Asymmetric Information Theory and Signaling Theory.In the empirical test,this paper selected the panel data from 2010 to 2014 in China A shares of listed companies as the research sample,and used the STATA11.0 to test three regression estimation models.The empirical results show that conservatism helps alleviate financial restricts significantly.After comparing the differences of conditional and unconditional conservatism,the empirical results verified the former one contributes more to relieve the financial constraints.Finally,this paper puts forward several proposals according to the results.On the one hand,companies should comply with the newest accounting standards and relevant legals,as well as establish the risk reaction mechanisms to improve the level of their conservatism.On the other hand,in order to maximize the role of accounting conservatism,the regulators should cultivate and improve the needs of robust accounting information from investors.