An Empirical Study Of The Impact Of Board Characteristics On Accounting Conservatism

Accounting Conservatism, so called accounting cautious principle, is one of the basic principles in accounting principle. Accounting Conservatism is not only an important principle of accounting measurement and recognition but also the important criterion to evaluate financial information quality. Accounting conservatism can restrict the management’s opportunistic behavior, reduce some risks of managers’ moral hazard, improve the quality of accounting information and protect the profits of the medium and small stockholders through confirms the different standardization level for loss and benefit. Accounting conservatism as an important accounting principle, it gives a great contribution to the accounting theory and actual practice. Accounting conservatism has been an academic focus in recent years. With the exploiting of the research of accounting conservatism, the influential factors have drawn the attention of many national and abroad scholars. As the core of corporate governance, board is not only directly affects the managers’ choice of some important accounting policy but also exercise necessary regulation on managers’ behavior to protect the behalf of shareholders, board directly affect the quality of accounting information. Accounting conservatism is important qualitative characteristics of accounting information, board have impact on accounting conservatism. Therefore, the article empirically examines the relationship between the characteristics of board and accounting conservatism and provide reference for improves the enterprise’s accounting information quality.The article select the listed companies in small and medium enterprise board, Shenzhen stock exchange as the research object, take empirical test based on financial data from 2010 to 2012 when the listed companies in china implemented the new accounting standards, choose the four board characteristic variables as explained variables including the size of the board, the proportion of the independent directors, the leadership structure between chairman and CEO and the share proportion of board, and then uses Basu model to test the relationship between the board characteristics and the accounting conservatism. Based on empirical test, the article obtained the following conclusions:(1)There is no significant relationship between the size of the board and accounting conservatism in Small and medium-sized enterprises. But, when the size of board is smaller than 9, accounting conservatism is positively associated with the size of board. When the size of board is bigger than 9, there is not significantly correlation between the size of the board and accounting conservatism, not significantly. (2)There is no dramatic correlation between the proportions of the independent director and accounting conservatism in Small and Medium Sized-enterprises. (3) Integration of chairman and CEO has significant favorable effects on accounting conservatism in China small and medium sized listed companies. (4) The share proportion of board has a positive correlation with accounting conservatism, improve the share proportion of board is helpful to the development of accounting conservatism.According to the conclusions, this article puts forward a number of proposals about the system of board of directors in china’s Small and medium-sized listed companies in order to improve the level of accounting conservatism.