Information Asymmetry,Managerial Overconfidence And Accounting Conservatism

Accounting conservatism,as one of the important principles of accounting measurement,can improve the contractual relationship of enterprises,increase the effectiveness of corporate governance,improve the efficiency of resource allocation,and safeguard the interests of shareholders and creditors.Since the 30 s of last century,with the deepening of the scholars' research on accounting conservatism principle,people have become more and more aware of the importance of accounting conservatism.Then,during the 80 s of last century,the accounting conservatism principle flowed into the capital market of our country.After the benefit of the accounting conservatism,the interested parties kept improving the quality of the information.However,management is the main decision-maker of the enterprise and the most important participant in the capital market.They decide the choice of accounting conservatism to a great extent.The traditional view is that,under the constraint of compensation contract and debt contract,management plays the role of "rational economic man" and will make decisions beneficial to the interests of shareholders and creditors.But in the real economic life,by its own cognitive bias and increasingly complex economic environment,management as the rational participants in the choice of investment decisions will pursue their own interests to the detriment of investors,creditors and other stakeholders.Among them,managerial overconfidence is a special form of management's limited rationality.As China's capital market is still imperfect,the existence of asymmetric information will make the management of the company more than the outside investors on the development of the company's internal information,resulting in the management of the blind arrogance of psychology.However,the basic measure of corporate governance in maintaining the interests of shareholders and investors is to alleviate the asymmetry of information by providing high-quality accounting information to the information disadvantaged.Therefore,information asymmetry is an important reason for managerial overconfidence,and also a hot topic in accounting conservatism research.At present,scholars at home and abroad mainly study accounting conservatism from the perspectives of debt contract,characteristics of the board of directors,ownership structure,corporate listing and external auditor.In order to further explore the accounting conservatism,this paper abandons the Adams dense to make "rational agent" hypothesis,from the perspective of cognitive bias in the behavior financemanagement,explore the influence of overconfidence in the information asymmetry and the management of the enterprise,accounting conservatism changes will happen.In order to solve this problem,this paper selects China from 2007 to 2016 the empirical data of Listed Companies in China as samples,Khan-Watts(2009)model to construct a multiple regression model,calculate the measure of the company's accounting conservatism level C_Score value;and according to the background characteristics of China's capital market to choose special asymmetric information and management overconfident agent and control variables related;data processing using Stata12.1 software,through descriptive statistics,correlation analysis and regression analysis and other empirical methods,test and significant correlation between information asymmetry,managerial overconfidence and accounting conservatism of the three.The study found that enhancement will damage the interests of holding the information disadvantage of asymmetric information,but the accounting conservatism will also increase to suppress this phenomenon;a certain degree of information asymmetry will enhance the managerial overconfidence level;a negative correlation between the level of accounting conservatism of Managerial Overconfidence and the company;in addition,the empirical results also shows that when the degree of information asymmetry is high,the relationship between Managerial Overconfidence and accounting conservatism than the low degree of information asymmetry is more significant.Based on this,this paper found that accounting conservatism can help shareholders and investors timely receiving bad news,an accurate estimation of the future value of enterprises,and to alleviate the information asymmetry of internal and external,restrain management overconfidence,and supervision and management to make rational investment decisions.This study not only enriches the relevant literature of accounting conservatism,but also points out the damage caused by managerial overconfidence and asymmetric information to enterprises.The existence of accounting conservatism principle can alleviate this phenomenon,which provides empirical evidence for the existence of this principle,and also provides a new angle of view for the study of corporate governance.