Influence From Liquidity Of The Largest Shareholder's Ownership On Accounting Conservation

Research on share-merger reform has special significance in China. A lot of scholars analyzed this in different angles. But, in our China, many experts just concerned on whether or not exist and influence factors of share-merger reform, instead of further discussions.In this paper, we use financial data and stock data of listing companies between the year 2005 and 2008 to examine whether accounting conservatism exists in listing companies during the reform, as well as the influence on accounting conservatism from reinforcement of ownership liquidity of the largest shareholder, which result from the reform.Through empirical analysis, we find that not only accounting conservatism exists in our listing companies during 2005-2008, but also liquidity surely influence on needs of accounting conservatism. And the larger shareholder's ownership liquidity, the smaller of needs of accounting conservatism. Reform reduces conflict between large and small shareholders, makes the interests of larger and small shareholders more consistent, and also reduces conflict between shareholders especially large shareholder and creditors. Expecting there is smaller possibility of the largest shareholder who can put robust or even decisive influence on chose of accounting policy and conforming of earnings to transfer interest by tunneling, creditors reduce the needs of accounting conservatism. We also find that contrasting with listing companies with smaller conflict between creditors and shareholders, in those listing companies that with larger conflicts between shareholders and creditors, the larger shareholder liquidity, and the smaller of needs of accounting conservatism.