A Study About The Impact On The Institutional Holdings To Earnings Conservatism Of Listed Companies

The strategy "Rapidly Developing Institutional Investors" was proposed by CSRC in2001. With the rapid development of institutional investors such as securities investment funds, and then in a series of policies to promote development of institutional investors, the institutional investor which is an important portion of the procedure of securities trading is growing and has greater impact gradually, especially reflected in the influence of governance process of listed companies. As an important reflection of governance effect of listed companies, the accounting information quality is of great significance for investors to make the right investment decision. Earnings conservatism is an important manifestation of the accounting information quality. With the expanding of institutional investors, the research on the influence of institutional holdings to earnings conservatism of listed companies will do a lot good to the further research on the accounting information quality. At the same time, it will improve the investment efficiency of the listed companies based on organizing the relationship between institutional investors and corporate governance. This article chooses institutional holdings rate as an substitution variable of institutional holdings, and discuss how institutional holdings influence earnings conservatism based on the A shares data of listed companies。 Some empirical evidences about how to improve earnings conservatism in listed companies in the current capital market environment are expected to be given in order to provide reference for the accounting information quality of the listed companies in China.This paper has five sections. Section1gives an introduction of background and significance, and then propose research idea and method according to the related literature at home and abroad. At last, some research innovation points and deficiencies are given. Section2involves some related concept definitions and introduce the theoretical basis from Contract theory, Principal-agent theory, The information asymmetry theory. Section3summary description of Chinese investor holdings the current situation and existing problems, this paper analyzes influence of the institutional holdings of listed company governance, accounting information quality. Section4, the data of2008-2010in A shares is selected and analysis method with section data, unbalanced panel data are used. Based on the Correlation analysis, constructing regression model of new Basu with institutional holdings and earnings conservatism, the suggested research hypotheses is examined. Then Section5expounds the main research conclusion and give some related suggestions for the problems that appear in the procedure of institutional holdings.The main conclusions of this paper are as following:1、the effect is positive, which means that the greater the institutional holdings rate is, the stronger the earnings conservatism is.2、Chinese institutional investors are not mature enough and give up accounting earnings conservatism and tend to be opportunism under performance stress.The main innovation of this paper lies in:earnings conservatism is a important embodiment of the accounting information quality, how institutional investors affect the earnings conservatism as an important external share holders is rarely discussed. To improve this situation, this paper focuses on this new point. On the other hand,this paper choose the new data of2008-2010in A shares as the samples of the empirical research, study about the impact on the institutional holdings to earnings conservatism of listed companies though modifying the model existed, In order to provide some more accurate empirical evidences for the impact on the institutional holdings to earnings conservatism of listed companies in the current capital market environment.