Nature Of Property Right&Accounting Conservatism And Financial Flexibility

Accounting conservatism can alleviate agency problems caused by the informationasymmetry and reduce agency cost and improve the efficiency of the contract, it’s thebenefit for creditors’ interests. Therefore, the improvement of accounting conservatismbenefit to the enterprise obtained from creditors funds, and also to help reduce the costof capital, so as to improve the enterprise’s financial flexibility. However, the accountinginformation distortion maked by accounting conservatism cannot be ignored.Conservative accounting behavior will lead to underestimate the net assets of the profitand undervalued, make the enterprise economic assets difference from accounting assets,it will lead to the declining ability of the enterprise actual financing and financialflexibility reduced. Based on the above analysis, the paper studies the robustness ofenterprise financial accounting of the positive and negative effect in our country elasticenterprises in the comprehensive effect.At first，this paper review the literatures about accounting conservatism andfinancial flexibility, and summarize and analyze those literatures. Then introducesaccounting conservatism economics theory and accounting conservatism measuringmethod. This paper take cash holding and investment-cash flow sensitivity and cash-cash flow sensitivity as proxy variables of financial flexibility. Constructing thecorresponding empirical model to test the relationship between accounting conservatismand financial flexibility after research hypotheses. In the empirical test, this use2007-2010, Shanghai and Shenzhen listed companies as a sample, And use its financialdata to test, show that enterprise financial report reflects the higher the degree ofconservatism, the enterprise to hold the stronger motive of cash, and reflect the higherinvestment-cash flow sensitivity and cash-cash flow sensitivity. Proof that theaccounting conservatism reduced the enterprise’s financial flexibility, make enterpriseuses conservative accounting behavior face after more financing constraints. Furtherconsideration after property right system, this paper put the samples are divided intostate-owned property right of enterprises and non-state owned property enterprisesample, study found that relative to state-owned property right of enterprises, tonon-state-owned property enterprise accounting conservatism the influence of financialflexibility more obvious, which reflect non-state-owned property enterprise accountingrobustness and hold cash related coefficient of significant more strong, accounting conservatism under the action of investment-cash flow sensitivity, cash-cash flow ofsensitivity significantly higher. Finally, the research content was summarized and putforward the prospects for future research.