Research On The Influence Of Multiple Major Shareholders On Accounting Conservatism

According to President Xi’s statement at the 18 th CPC National Congress,‘The key mission is high-quality progression to build an all-around modern socialist country’,the embodiment of it from enterprises’ point view is to attach importance to accounting conservatism.Conservatism is a weighty principle of financial treatment for its functions.On one hand,strong accounting information is conducive to an enterprise’s internal business strategy adjustment.On the other hand,it would save more time and enhance the effectiveness of stakeholders’ decisions.Extensive studies showed that ownership structure highly correlates to governance and impacts accounting information quality.Constituent member from Chinese listed companies took a large part of this type of structure,as the progress of the mixed ownership of state-owned enterprises and the reform of non-tradable shares.Many major shareholders,who take a larger proportion of equity,lay more emphasis on the management of enterprises and supervisory power utilization.In addition,many major shareholders have strong supervisory ability for their different industry and professional backgrounds,rich experience and insights on corporate governance issues.Particularly,multiple major shareholders can effectively curb the management’s selfish behavior in easing the principal-agent problem,and further optimize the accounting conservatism.This paper did an empirical analysis according to panel data of Chinese listed companies from 2007 to 2020 based on the theory described.The results showed that:(1)the system of multiple major shareholders improves the accounting conservatism of an enterprise significantly,increasing the number of major shareholders rather than controlling ones could lead to better accounting conservatism.(2)The shortsightedness of the management is responsible for mediating effect,because several major shareholders improve the accounting conservatism of enterprises by restraining the short-sightedness of the management.(3)The impact of these shareholders on accounting conservatism varies among enterprises with different life cycles.They also impact a lot on accounting conservatism in mature enterprises.(4)It shows a distinctive difference in enterprises with different factor intensity by the influence of this system on accounting conservatism: has more impact on capital-intensive enterprises rather than labor ones.(5)Major shareholders have a much more positive effects on accounting conservatism in enterprises with better internal control quality.Thus,the results is practically useful for market regulation,protection of investors’ rights and interests and optimization of the equity structure of enterprises.