Empirical Research On Accounting Conservatism And Inefficient Investment

Inefficient investment behaviors are widely exists in listed company in our contour, and the efficiency of investment is far behind developed country. Inefficiency investment will reduce the enterprise value. Inefficient investment fall into two categories:over-investment and under-investment. Over-investment means invest on the items that NPV are minus. Under-investment means that do not invest on the items that NPV are positive, and lose the chance to enhance enterprise value. Both over-investment and under-investment would cause capital misallocation. From the enterprise level, the behavior will lower invest efficiency, and from the capital marker level, it will cause the capital marker developed slowly. Thus, how to solve the current situation become the academic hot spots.At present, there are many theories about how to solve the inefficient investment, agency theory, information asymmetry theory and manager behavior theory, and so on. However, for China’s current institutional background and corporate structure, the ways to solve the inefficient investment is important for improving the capital market. This paper analysis the relationship between accounting conservatism and inefficiency investment based on agency theory and information asymmetry theory.This paper systematically reviews the economic consequences of accounting conservatism and factors affecting the efficiency of investment, we carried out empirical test after analyzing the influence accounting conservatism on efficiency investment. The full text can be divided into six parts.The first part is mainly to introduce the research background, research significance, research methods, research ideas and innovations in order to introducing the breakthrough point of this article.The second part is mainly on collection and to sum up literature about accounting conservatism and inefficient investment. Finally, we have a briefly reviewed. The third part, we review the basic concepts of accounting conservatism and inefficient investment first, then, we explain the theoretical basis of accounting conservatism influencing inefficient investment. Finally, we build the hypothesis.The fourth part, we elaborated the data sources and processing methods first, and then according to the basic hypothesis of this article and the factors affecting the inefficient investment, we designed the model and explain the variable name and computing method.The fifth part, according to the traditional empirical approach, we conduct the descriptive statistics and correlation analysis, and then the regression results are interpreted in detail.The sixth part, based on the regression results and analysis, we puts forward suggestions to improve the efficiency of corporate investment.The empirical results show that, on the one hand, the accounting conservatism can effectively restrain excessive investment, relative to state-owned enterprises, the inhibition effect in the private enterprises is stronger; Accounting conservatism, on the other hand, also can increase enterprise insufficient investment, in private enterprises, the degree of lack of investment is higher.Research on the relationship between accounting conservatism and inefficient investment are relatively less and the conclusions are differential. In this paper, we choose the manufacturing industry whose accounting conservatism are obvious to check the relationship between accounting conservatism and inefficient investment and add the property right characteristic to this paper, giving the company accounting behavior, policy formulation department and supervision department a good inspiration.