Research On The Relationship Between Accounting Conservation And Inefficient Investment Under The Influence Of Equity Characteristics

Accounting conservatism,as one of the important characteristics of accounting information qualities,requires enterprises to be cautious when dealing with uncertain economic business.The recognition of uncertain income should be more cautious than the recognition of uncertain loss and expenses.As one of the important activities of enterprises,investment activities have a vital influence on the survival and development of enterprises.In modern enterprise management,inefficient investment is quite common.The accounting conservatism,as an effective accounting information,can reduce the degree of asymmetric information and agency costs,which will help to improve the efficiency of investment.Under the influence of company’s equity characteristics,the role of accounting conservatism on inefficient investment is also different due to the existence of agency cost and information asymmetry.Based on the principal-agent theory framework,this article studies the impact of accounting conservatism and inefficient investment,and further analyzes the influence of the company’s equity characteristics on the relationship.This article uses the combination of theoretical and empirical research methods,firstly it combs the studies and sums up the accounting conservatism,inefficient investment,equity characteristics,etc.,for the following theoretical and empirical studies;then it does the theoretical analysis and hypothesis reasoning to get the relationship between accounting conservatism and non-efficiency investment and the adjustment of the company’s equity characteristics.Finally,it does the empirical research and analysis according to the 2012 China Securities Regulatory Commission industry classification standard and selects 2012-2015 SSE A-share listed companies data,using Richadson(2006)residual model to measure non-efficiency investment and Basu(1997)earnings-earnings model to measure the accounting conservatism.The free cash flow,total asset turnover,management expense,executive compensation and annual dummy are taken as control variables to test the impact of accounting conservatism on inefficient investment.Then it divides the company’s equity characteristics into ownership nature and ownership structure.The ownership nature,the proportion of controlling shareholders,equity checks and balances,the proportion of institutional investors and the proportion of management ownership are taken as the adjustment variables to study the influences of accounting conservatism and inefficient investment.Empirical results show that accounting conservatism inhibits inefficient investment behavior.Ownership nature,the proportion of controlling shareholders will weaken this inhibition,but the equity checks and balances,the proportion of institutional investors will strengthen this impact,but the impact of proportion of management ownership is not very significant.According to the empirical results,this article gives concrete suggestions in the three aspects of accounting conservatism,ownership nature and ownership structure of the company:to improve the understanding of accounting conservatism,to implement the efficient state-owned enterprise restructuring plan,to strengthen internal and external equity supervision mechanism,so as to do some benefits to reduce inefficient investment for listed companies.