Accounting Conservatism And Inefficient Investment

Since reform and opening up, our country’s market economic system is growing stronger. Especially, the state-owned enterprises’achievement is remarkable. The state-owned enterprises, which occupy more resources and affect widely, go through expanding autonomy, separation of ownership from management, establishing modern enterprise system and establishing the State-owned assets regulatory institution. The state-owned enterprises don’t have operational difficulties any more, but are well-managed. With the state-owned enterprises’ increasing investment in recent years, unclarified contractual relationship, government intervention and soft budget constraints still remain which leads to information asymmetry and agency problem. So appearance of inefficient investment is common. Therefore, this paper which is based on the state-owned enterprises’data in Shanghai and Shenzhen A shares from2009to2012is about to verify what influence can accounting conservatism make to inefficient investment.Content of this article is divided into five parts:The first part is the introduction. This part describes the background and the importance of the paper. And then it presents the research method, the research design, the framework and the innovation.The second part is references. The references of inefficient investment are divided into four parts, which include the definition, the causes, the quantitative methods and the constraints. The references of accounting conservatism contain the definition, the motivation, the quantitative methods and the economic consequences. At the end of this part, there is the commentary of the references.The third part is the research design. The state-owned enterprises’financial data is the sample. Based on the theory and the models domestic and overseas, this part builds hypothesis, selects variables, and explains variables.The fourth part is the empirical result analysis. By the means of descriptive statistical analysis, correlation analysis and regression analysis, this part is about to dissect the relationship between inefficient investment and accounting conservatism in the state-owned enterprises.The fifth part is the conclusion and the revelation. It includes the conclusion, the revelation, the limitation of this paper and the direction for future study.The innovation and features of this paper are:(1) Visual angle innovationThis paper from the perspective of accounting conservatism researches inefficient investment. The result of this paper will enrich the study of accounting conservatism’s economic consequences.(2) Sample innovationPast research aims at the whole listed companies, rather than the state-owned enterprises. This paper expands the application of accounting conservatism’s economic consequences in the state-owned enterprises, which will promote the state-owned enterprises.(3) Comparison innovationThe central government and the local government control different resources and have different interests. Local State-Owned Assets Supervision and Administration Commission is different with State-owned Assets Supervision and Administration Commission in resource allocation and investment restrictions. So it’s necessary to conduct subgroup test by ownership property.The results show that from2009to2012accounting policies in the state-owned enterprises are conservative generally, and it contributes to reduce inefficient investment. Based on the result, this paper insisted that it’s necessary to rationally use accounting conservatism, consummate internal government structure, smooth the ownership system of the state-owned enterprises and improve the system of financial report disclosure in the state-owned enterprises.