The Impact Of Accounting Conservatism On The Cost Of Equity Capital

In the daily business activities of enterprises,financing activities are an important measure to ensure the sustainable operation of enterprises.Many studies have shown that there is a large amount of preference for equity financing in China's capital market,so the corresponding issue of equity financing cost has become the focus of research.The former empirical experience shows that the firmness of accounting information of enterprises is gradually increasing,and the sound financial information helps to better protect the interests of investors.And accounting conservatism has an important contract function.With the development of relevant theories,accounting conservatism is regarded as an important factor affecting the cost of equity capital.Accounting conservatism reduces information asymmetry between stakeholders and avoids investors' adverse selection and moral hazard.Therefore,the increase in the degree of accounting conservatism not only plays an important role in the decline of the cost of equity capital,but also has a long-term impact on improving the capital market and increasing the effectiveness of the capital market.Among them,the different life stages of the enterprise represent the different business conditions of the enterprise,and the investment risks generated by the investors are also different.The accounting information quality and market feedback also have different degrees of difference.Therefore,the accounting conservatism is related to the equity.The extent of the impact of capital costs is also different.Therefore,it is of great significance to study the degree of influence of corporate accounting conservatism on the cost of equity capital in different life stages of the market,to improve the efficiency of market supervision by market supervisors and to maintain the stability of the investment market.In order to gain a deeper understanding of the opinions and conclusions of experts and scholars in this area,first of all,the content of the relevant literature should be grasped and sorted out,and the overall understanding should be clear,and then the accounting conservatism and equity capital will be summarized.Related concepts such as cost are analyzed using related theories to study the impact of accounting conservatism on the cost of equity capital.In order to verify the rationality of the hypothesis,the annual report data and other information of domestic listed companies are selected,and a model is provided to provide evidence support.Finally,empirical research shows that accounting conservatism has a negative correlation effect on the cost of equity capital,and in the three life cycle stages of the enterprise,the degree of influence between the two presents a U-shaped state,that is,gradually declines first.rise.This indicates that when the company exhibits the characteristics of the recession business,it should be paid more attention by the regulatory authorities,because at this stage,the enterprise managers are more motivated to manipulate accounting information,and at this stage investors also have higher requirements for accounting conservatism.Therefore,through the study of the cost of equity capital in different stages of accounting conservatism,it can bring valuable empirical evidence and new directions for the effective operation of capital markets and investor decision-making.