An Empirical Study On The Effect Of Managerial Overconfidence On Accounting Conservatism

The conservative financial reporting is an effectively way to solve the problem of asymmetric information to investor. The existing research is often based on the traditional economic theory, The reasons of accounting conservatism of the present research are depend on the hypothesis of rational economic man. While the reality of people have knowledge, beliefs and logical way of thinking that may not be completely like a machine and according to the given program entirely accurate operation. Behavioral finance give up the hypothesis of rational man, social psychology and learning about individual preferences and decision results are applied to the interpretation of the reality of the financial market, which as the research as effect of micro individual managers of cognitive bias on corporate behavior provides a new angle of view. This paper selects 2012-2014 years in Shanghai and Shenzhen A-share listed on the main board of the company’s financial and transaction of stocks data as the research object, this paper study the relationship of managers overconfidence and accounting conservatism, and to distinguish the nature of property rights and institutional investors supervision strength to make a further study. The research results show that managerial overconfidence will reduce enterprise accounting conservatism, the non state owned enterprises managerial overconfidence on Accounting Conservatism negative impact than the state-owned enterprises greater, more weakly in institutional investor supervision strength of the enterprise, managerial overconfidence on the negative impact of the accounting conservatism more obvious and serious. Therefore, the listing corporation should establish a more perfect and reasonable evaluation system and training system to cognitive biases for managers to correct guidance, and improve the reform of property rights, expanding and fostering institutional investors.