The Empirical Research Onaccounting Conservatism And Effectiveness Of Executive Turnover

With the deepening of reform, the rapid development of economy, China's stock markets is gradually consummate, has begun to take shape. In this development process has emerged a large number of manager turnover phenomenon. The executives of the listed companies are the leader of the operation and management, and play a decisive role in the company's various business decisions. The company replaced senior manager, may impact on the company's production activities and business operations results in multiple perspectives, announced news will cause the stock market significant reaction. Therefore, manager turnover-related research has become a hot topic in academic circles.By reading a lot of relevant literature, the author summarized the literature of studying the manager turnover, most only research it's relationship with the performance of the company, rather than considering the quality of the performance will also affect the efficiency of executive turnover. As accounting conservatism can insight into the real business performance, it receive the concern and attention of accounting theory and practice. So this article combine the conservatism and executive turnover, analysis and discusses the sensitivity of manager turnover to company performance. First, this article expounds the meaning and the basic theory of accounting conservatism, incorporate contract theory, agency theory, and theory of entrepreneurship, theoretical analysis the factors which cause the executive turnover. Then, we proposed a theoretical basis and research hypotheses. Second, we set the dependent variable, independent variables and control variables, then the Logistic regression model was established. By collecting 2006 to 2008 listed companies in Shanghai Stock Market A stock turnover executives data, we find that the number of conventional change is more than the unconventional change, and the general manager replacement is more than chairman. Combined the 2005 to 2007 company performance and conservatism index, we do the descriptive statistics, correlation test and Logistic regression analysis. The model did not exist multicollinearity, and the result proved that the relationship between executive turnover and company performance is significant negative. And the increasing of the accounting conservatism, will strengthen the sensitivity between the two. After that, For different degree of conservatism company, we compare and analysis the performance of company's executive turnover before and after, it verify that the conservatism's improvement can enhance the effect of executive turnover. Empirical results show the accounting conservatism makes the company can not completely rely on the company's book performance to make the decision of manager turnover. It also should consider the quality of performance—accounting conservatism. That will make the manager replacement more effective and accurate. Finally, according to the empirical results, we proposed the related recommendations.