Study On The Relationship Among Accounting Conservatism,Agency Costs And Inefficient Investment

Accounting conservatism is an important principle of financial reporting,it has been playing a profound impact on accounting practice.The Chinese new accounting standards in 2006 and global financial crisis in 2008,the measurement of robustness has received wide attention.Accounting conservatism has requirements that it has delay confirmation of "good news" and timely confirmation of "bad news",Accounting conservatism restrict management manipulate company earnings,it reduces management‘s self-interest which may leads to irrational investment behavior.Existied research results show that there is no unified conclusion whether the influence of accounting conservatism on overinvestment and underinvestment is consistent.How does accounting conservatism affect inefficient investment behavior,accounting conservatism has a direct or indirectly effect on investment efficiency,existing literatures do not give detailed explanation.This paper chooses from the perspective of agency cost,we boldly envisaged that in the impact of accounting conservatism on inefficient investment,whether agency costs may play a mediating role between them.This paper is based on the type of proxy agent conflict,agency costs are divided into three types: the agency costs between shareholders and managers,agency costs between controlling shareholders and minority shareholders,agency costs between shareholders and reditors.The accounting conservatism,agency costs and inefficient investment are included in the same research framework.We try to find the internal relationship between them,then we give some suggestions for standardizing information disclosure and improving investment efficiency.This paper selects the data of A-share listed companies from 2009 to 2015 as initial samples,we establish a mathematical test model.We study the specific impact of accounting conservatism on two inefficient investment behaviors(overinvestment and underinvestment),then we study effect of accounting conservatism on agency costs,as well as the role of agency costs in both of them.Empirical results show that accounting conservatism plays an inhibitory effect on overinvestment,yet it playes an aggravating effect on underinvestment.There is a U type curve relationship between accounting conservatism and shareholder-managerment agency cost,and the relationship between accounting conservatism and the controlling shareholder-minority shareholder agency cost is a inverted U type,the relationship between the shareholder-creditor agency cost is also a inverted U type relationship.The results show that the influence of accounting conservatism on the agency cost has a certain interval effect.Only when accounting conservatism in a certain range can effectively reduce agency costs.The further studies have shown that accounting conservatism,agency costs and inefficient investment have a intermediation relationship,agency costs play a partial mediating effect between accounting conservatism and inefficient investment.We uses literature reading,theoretical derivation and empirical model to complete the research.The possible innovations of this paper are reflected in the following aspects: research perspective aspect,in the framework of principal-agent theory,we select the perspective of agency conflict,the agency costs are divided into three types,we select corresponding variables to measure the three types of agency costs,then model is established for empirical test.Research content aspect,we innovatively add agency cost into the original research framework,we study internal relationship among three furthermore,we finally confirmed that agency costs plays partial mediating effect role between accounting conservatism and inefficient investment.Research methods aspect,we choose K&W models to calculate C-Score index to measure accounting conservatism,it optimized the Basu(1997)model,it remedy flaws that Basu model can't measure the degree of accounting conservatism of a particular enterprise in a specific year.