Accounting Conservatism,Financing Constraints And Over-investment

Investment activities play a vital role in the healthy growth of enterprises,and will have a direct impact on the company's operational risk,profitability and so on.It maximizes the value of enterprises by optimizing the allocation of resources,which greatly enhances the vitality of the company.Correct and effective investment plays a decisive role in the success or failure of a company in a sense.Financial experts regard investment decision as one of the three most important decisions of a company,which can improve the efficiency of investment and play a positive role in sustained and steady economic growth,and make the capital market develop healthily.However,in practice,the imperfection of the market,the separation of ownership and management rights,the asymmetry of information and the conflict of principal-agent will make the company's investment free from the optimal level,resulting in inefficient investment phenomena,that is,over-investment or under-investment,which will damage the overall value of the enterprise and have a negative impact on the effective operation of the whole macro-economy.At present,over-investment,a phenomenon of inefficient investment,is widespread in Listed Companies in China.It will not only increase the risk of bad debts,but also make enterprises continue to invest unnecessarily in areas with excess capacity and waste the production factors and resources of enterprises.Therefore,exploring how to improve the investment behavior of enterprises and improve the efficiency of resource allocation is an important direction to promote the development of enterprises.At present,there are many literatures on Accounting Conservatism and Over-investment at home and abroad,but few of them are related to accounting conservatism,financing constraints and over-investment.On this basis,this paper will make up for the deficiencies of ignoring the background factors of financing constraints in current research,further study the relationship between accountingconservatism and over-investment,and provide new evidence of the usefulness and necessity of accounting conservatism.On the basis of referring to the relevant research results of predecessors at home and abroad,this paper studies the relationship between accounting conservatism,financing constraints and Over-investment by combining theoretical and empirical methods.Firstly,based on signal transmission theory,information asymmetry theory and principal-agent theory,the relationship between them is analyzed theoretically.Then,select Shanghai and Shenzhen A-share listed companies from 2013 to 2017 as samples,and construct relevant models rationally,and empirically test the relationship between the three.Among them,over-investment sample companies are divided into state-owned enterprises and non-state-owned enterprises according to their nature to further investigate the impact of ownership nature on the relationship between the three.The results of theoretical research and empirical research show that:(1)accounting conservatism restrains over-investment;compared with state-owned enterprises,accounting conservatism restrains over-investment more strongly in non-state-owned enterprises.(2)Financing constraints can restrain excessive investment;compared with state-owned enterprises,financing constraints have more significant effect on restraining excessive investment in non-state-owned enterprises.(3)There is a synergistic effect between accounting conservatism and financing constraints in restraining over-investment;compared with state-owned enterprises,the synergistic effect of accounting conservatism and financing constraints in restraining over-investment is more significant in non-state-owned enterprises.The conclusions drawn in this paper can provide more convincing and reliable evidence for policies to improve investment efficiency.