The Empirical Research About The Impact On The New GAS To Earnings Conservatism Of Listed Companies

Accounting conservatism principle is also called the prudence concept principle. It show that enterprise should maintain due care, not overstate assets or income and understate liabilities or expenses, when it recognized,measured and reported transactions or events for accounting. Since 1992, our accounting system introduced conservatism principle firstly; it experienced four times large-scale accounting system reform, accounting system (or Accounting standards) gradually expanded and strengthened the use of conservatism principle. On February 15, 2006, the Treasury promulgated new accounting standards (GAS), it showed that our accounting system reform has entered a brand-new period. With the implementation of new accounting standards, the adjustments of conservatism principle in the new accounting standards will have far-reaching influence in listed companies. After the implementation of the new GAS, it has important practical significance for the reform of accounting standards and the securities market regulation, when we scientifically and timely evaluated the influence of accounting conservatism to the public company. This paper's purpose is to evaluate the results of new GAS to improve the quality of accounting surplus by compared the public company's financial data before and after with implementation of it, so as to evaluate the results of reform and implementation from the angle of accounting conservatism. At the same time, this research also hopes to provide scientific basis for market regulators to make more scientific and effective regulation.Li Zeng quan and Lu Wen bin (2003), Zhao Chun guang (2004), Chen Xu dong and Huang Deng shi (2006), and Zhu Cha fen (2006) from different angles proved the existence of accounting conservatism of listed companies in China. And with the deepening reform of accounting system, the accounting conservatism of listed companies increased gradually. However, Li Yuanpeng and Li Ruoshan (2005), Qu Xiaohui and Qiu Yuehua (2007), Song Yu and LiZhuo (2007) showed that earnings conservatism of the whole listed company are not true robustness , it is caused by " big wash bath " of the loss companies. Namely, the prudence principle of accounting system strengthened make listed companies have the motivation to manipulate earns. That is, the regulations of accounting conservatism in old accounting system provide opportunity and possible for the listed company to manipulate earnings through " big wash bath ". Compared with the old accounting system, the new GAS have occurred many substantial changes in 2006.And the prudence principle was be appropriate adjusted in new GAS. How is the effect about the adjustments of prudence principle in the new GAS to listed accounting? Would the new GAS effectively control the behavior of listed company "big wash bath"? Based on the above questions, this paper focus on influence of implementation about the new GAS to accounting conservatism of the listed companies in China . Main content as follows:This paper reviews the connotation of accounting conservatism and classification of it, and expounds the research status of it from the existence of it and influence of earnings manipulation to conservatism. Firstly, in this paper, accounting conservatism is defined as accounting earnings is recognized more timely on "bad news" than "good news", so as to the negative earnings recognized before has more weak sustainability than positive. Secondly, according to the prudence principle of accounting to the different effects of accounting practice, accounting conservatism is divided into conditional conservatism and unconditional conservatism. Thirdly, this paper reviews the literature of accounting conservatism from the following two aspects: 1. Reviewed the existence of accounting conservatism in listed companies in China, scholars found that accounting conservatism has been existence in listed companies in China, and with the deepening reform of accounting system, accounting conservatism is a trend of increase gradually.2.Reviewed the effects of earnings manipulation to accounting conservatism, a large number of empirical studies proved that the prudence in the whole listed companies is not real accounting conservatism, but as a result of earnings manipulation. Therefore, the prudence principle of accounting system strengthened make listed companies have the motivation to manipulate earns, namely, the behavior of "big wash bath" in loss-making companies makes the whole of the listed company with prudence. Finally, this paper points out the main factors of accounting conservatism in listed companies in China.This paper mainly from the "accountability responsibility" and "decision-making availability" two aspects elaborated the applicability of the prudence principle in listed companies in China, and analyzed the prudence principle in the new accounting standards. Accounting principle cannot be separated from the financial accounting objectives, and can adapt economic environment of the times. The goals of financial accounting in GAS is described from the "accountability responsibility" and "decision-making availability", Therefore, the prudence principle not only is the inevitable requirement to reflect the "accountability responsibility" of management personnel, but also is an assurance of accounting information quality in the process of "decision-making availability". At the same time, in order to avoid excessive use the prudence principle to distort the enterprise's financial position and operating results, for reducing misleading to users, prudence principle in the new accounting standards as a secondary quality requirements of accounting information, so as to achieve the objective moderate application conservatism principle. Therefore, the new accounting standards on the prudence principle done adjust, mainly displays in: introduction of the fair value, depreciation, intangible assets , investment real estate, other transactions or events in the prudence principle of moderate applications such as debt restructuring, donation, etc. Based on listed companies in Shenzhen and Shanghai stock exchange as a research sample in 2005——2007, using descriptive statistics, Pearson correlation and regression analysis of model, this paper tests the existence and the changes of accounting conservatism at the new GAS before and after implementation from the timeliness and sustainability of earns. Draw the following main conclusions: Firstly, the whole listed companies of 2005 had the characteristics of accounting conservatism. And after eliminated or controlled loss-making companies, the characteristics of accounting conservatism has nearly disappeared, this also shows that the quality of accounting information for loss companies was more bad. Secondly, after the new GAS promulgated, accounting conservatism of the whole listed company appeared inflection point in 2006. Thirdly, the implementation of new GAS reduced the accounting conservatism of the whole listed company.