Ultimate Property Rights,managerial Overconfidence And Accounting Conservatism

Accounting conservatism is a long-standing and controversial accounting information quality characteristic.As a corporate governance mechanism,accounting conservatism can effectively alleviate the internal and external information asymmetry,inhibit managers' opportunistic behaviors,protect interests of investors.Therefore,it is necessary to study it.The development of behavioral finance shows that management is not completely rational and that its overconfidence will have a significant impact on corporate financial decisions.Based on this background,starting from the irrational cognitive bias of managerial overconfidence behavior,this paper explores its impact on accounting conservatism,which not only enriches the influencing factors of conservatism,but also broadens economic consequences of it.Using method of combination of normative research and empirical research,taking data of listed companies of A-share listed companies in Shanghai and Shenzhen stock markets for 2012-2016 as samples,taking changes of managerial number of shares and the relative pay concentration of management as their overconfidence,this paper uses the Basu model and the C-Score model to measure the accounting conservatism.On the basis of this,we design the research model of this article,and reexamine the relationship between managerial overconfidence and accounting conservatism.At the same time,considering the special arrangement of property rights in our country,further considering the influence of difference of ultimate property right on the relationship between managerial overconfidence and accounting conservatism,we can draw the following conclusions: First,the managerial overconfidence is negatively correlated with accounting conservatism.Overconfident management significantly reduces conservatism of company's financial reports.Second,the impact of ultimate property ownership on managerial overconfidence and accounting conservatism is different.The impact of overconfidence on accounting conservatism by private listed companies is stronger than State-owned listed company.Based on above conclusions,this paper proposes four areas to further inhibit the negative impact of managerial overconfidence on accounting conservatism as following: strengthen the training of management,establish an effective learning mechanism,design a reasonable management evaluation and compensation incentive mechanism,improve corporate governance structure,form an effective supervision and balance mechanism and speed up bank property rights system reform,eliminate bank credit discrimination.