Study On Equity Nature, Government Subsidies And Accounting Conservatism Of Listed Companies

Accounting conservatism is one of the important characteristics of accountinginformation quality. Its enhancement helps enterprises to fulfill their contractualobligations and protect the interests of shareholders and creditors. Since the21stcentury, the world has entered the information age, product life cycle has shortened,technological upgrading has accelerated, and financial derivatives have been widelyused. Under this circumstance, the risk brought by the uncertain events is increasing.If the company fails to take prudent attitude to cope with risks and discloseaccounting information conservatively, it may lead to greater loss of property andeven bankruptcy for businesses and investors compared to the past.Based on the aforementioned grim situation, surrounding the treatment principleof accounting conservatism to “uncertainty”, this paper investigates the influence ofgovernment subsidies on accounting conservatism and further analysis the influenceof equity nature on government subsidies. Concentrating on government subsidies,this essay discusses a kind of focused questions between corporate governance andinformation disclosure in the anticipation of giving some reviews and judgments tothe behaviors that our government internes the market economy through subsidy.Using a sample of all fisted A-share firms between2007and2012, this papermake some improvements of Basu model combining with our market characteristics.The results of regression support that government subsidies have multiple roles foraccounting conservatism. It shows that state-owned enterprises have a higher level ofgovernment subsidy than non-state-owned enterprises. Finally, this paper makes somerecommendations to the government subsidies to enterprises.