Accounting Conservatism,Internal Control And Investment Efficiency

Investment activity is one of the most important economic activities in the modern enterprise's business process.Highly efficient investment can not only bring high profits to the company,but also promote the substantial increase in the profitability of the company.Investment is the starting point for a series of key issues in corporate financial decision-making.For the development of enterprises,high-efficiency investment plays an important role.However,in the real capital market,information asymmetry and the principal-agent problem caused by the separation of ownership and management rights are common problems.These problems will cause the company's investment to be dissociated from the best investment level,resulting in excessive investment and insufficient investment.Corporate investment efficiency.From the point of view of the generation of inefficient investment behavior,the reason can be attributed to: due to the inconsistency of interest points and information receiving channels between managers and shareholders of listed companies,managers tend to choose investment decisions that are beneficial to themselves.This has led to over-investment and underinvestment in listed companies.As one of the basic principles of accounting,accounting conservatism adheres to the principle of prudence and stability,which can reduce the information asymmetry problem of enterprises to a certain extent,and alleviate the various agency problems arising therefrom,and play a fundamental role in improving the quality of enterprise accounting information.Role,thereby enhancing corporate investment efficiency.Internal control is a kind of supervision and management means in the process of business operation.It plays a certain role in enterprise investment.The origin of internal control is the agency problem in the enterprise.Various problems caused by the agent are internal controls.The fundamental problem is solved.Therefore,internal control can inhibit the company's non-efficient investment behavior at the beginning of its creation.From the existing literature,there are many literatures on accounting conservatism and investment efficiency,internal control and investment efficiency both at home and abroad,but there are few literatures that link these three together and carry out related research.Based on the above analysis,it provides an opportunity for the study of this article.From the perspective of internal control and accounting conservatism,this paper proceeds fromthe perspective of mitigating agency problems and information asymmetry,and studies the following two issues: First,accounting conservatism is the way to influence over-investment and investment by enterprises.Insufficient phenomenon;Second,considering the internal control of the enterprise,whether the relationship between accounting conservatism and investment efficiency will be affected by the internal governance mechanism of the enterprise.This paper takes the period from 2006 to 2014 as the research period,taking the data of China's A-share listed companies as the research sample,after eliminating non-financial insurance companies,it conducts a series of empirical studies on the relationship between accounting conservatism and investment efficiency.The empirical conclusions show that the more stable the accounting,the more able to mitigate the excessive investment of the company,indicating that the accounting conservatism is significantly negatively related to excessive investment;conversely,the higher the accounting conservatism,it will intensify the lack of investment in the enterprise,that is,the two are significant Positive correlation.In addition,from the perspective of internal control,this paper explores whether the relationship between accounting conservatism and investment efficiency will change on the basis of research results.The research conclusions show that the internal control of a company can play a substitution effect similar to that of accounting conservatism.The quality of internal control of the enterprise is high,and the relationship between accounting conservatism,over-investment,and underinvestment will be weakened.This article mainly covers the following six parts: The first chapter is the introduction,which briefly introduces the research background,significance,ideas,content,methods and the main innovations of this article,and introduces the basic context of the article;For the literature review,in this section,in conjunction with the thesis,the literature on the existence and governance mechanisms of domestic and foreign investment efficiency,the influence of accounting conservatism on investment efficiency,and the impact of internal control on investment efficiency are collated and summarized.The third chapter is about the basic theory of accounting conservatism affecting investment efficiency.In this part,the definition of accounting conservatism and investment efficiency,the mechanism of the influence of accounting conservatism on investment efficiency and the analysis of institutional background,the free cash flow hypothesis related to this article,The theoretical foundations of information asymmetry theory and principal-agent theory are briefly described.Chapter 4provides the theoretical analysis and hypothesis of the impact of accounting conservatism on investment efficiency.Through theoretical analysis,the effects of accounting conservatism on investment efficiency are proposed respectively.And considering the quality of internal control of the enterprise Soundness of the assumptions affect the efficiency of investment.In addition,the research model of this paper is designed on the basis of previous scholars' research.The fifth chapter is the empirical test and analysis.This part uses the constructed multiple linear regression model to determine whether the enterprise's accounting conservatism has a significant impact on investment efficiency and joins internal control.After the variable,it empirically tests whether there is a significant relationship between the accounting conservatism and the investment efficiency,and carries out a basic analysis of the test results.The sixth chapter is the research conclusions and policy recommendations.The results of the test and analysis are summarized.And summarizing,it puts forward proposals such as the rational use of accounting conservatism,the improvement of internal control mechanisms,and the improvement of financial reporting disclosure systems.