| The concept of accounting conservatism was proposed as early as 500 years ago.Since then,it has been attracting wide attention.It has also played an important role in the mechanism of corporate governance and accounting principle.The cause of accounting conservatism lies in the contract.In essence,the contract aims to relieve the conflict of agent between the manager and the the shareholders.The contractual relation has empowered the manager to operate and manage the firm.However,it is probable that the manager may make the power rent-seeking and manipulate the accounting information because of personal factors.It will have a negative effect on the accounting conservatism.Hence,the power of the manager is an important factor influencing the accounting conservatism.In addition,the accounting conservatism can protect the interest of the shareholders,reduce the uncertainty and promote the positive development of the firm.In other words,it can have a positive effect on firm value.As shown by the existing researches,the economic consequence of accounting conservatism is basically positive.For example,the accounting conservatism can improve the performance of the firm.To a large extent,the accounting conservatism of an firm is influenced by the agent problem.Without doubt,those firms with an excellent accounting conservatism can provide the high-quality accounting information.It can also facilitate the democratic and scientific decision making,limit the inefficient behavior and reduce the transaction cost of various economic activities.In a word,it can increase the value of the firm.But from another angel,if the manager of the firm have a greater power and more resources,he will be more likely to lean toward the opportunism.In other words,they may resort to the power rent-seeking for personal benefits.The manager will also intervene in the disclosure of accounting information,which may affect the quality of accounting information adversely.The accounting conservatism may be faked to satisfy the requirement of the regulator.There has arisen a question as to how the manager with a greater power affects the accounting conservatism.Will it have a positive or negative effect on the accounting conservatism?From the perspective of accounting conservatism,this paper has discussed the relationship between the power of the manager,accounting conservatism and firm value.The research has focused on the key words of power,conservatism and firm.The logical sequence of this paper is as follows.First of all,the normative analysis has been conducted.After determining the basic concepts and measurement methods,it will review the researches relevant to firm value,accounting conservatism and the power of the manager.Secondly,from the angel of the relevantsystem in China,this paper has discussed the interactive mechanism between them so as to lay the foundation for the empirical research.The empirical analysis has been made to verify the hypothesis.The main conclusions of this paper are as follows:(1)the firm value will increase with accounting conservatism.As shown by the empirical research,the index of accounting conservatism is positively and also significantly related to the index of firm value.(2)the power of the manager will restrain the accounting conservatism from improving the firm value.As shown by relevant researches,the expanding power of the manager will restrain the positive effect of accounting conservatism on firm value.In other words,if the manager of an firm has a greater power,the positive effect of accounting conservatism will be subject to more constraints.As a result,the firm value will decrease.Lastly,some advice has been provided.The limitation and outlook of the research have been also given. |
