Accounting Conservatism, Debt Governance And Underinvestmen

It is a remarkable characteristic of our economic growth at present stage that the transformation from high speed development to high quality development,and it is very important for economic development to improve the efficiency of investment.Investment efficiency not only measures the quality of enterprise investment activities,but also reflects whether the allocation of economic resources reaches the optimal state to a certain extent.The inefficient investment behavior is defined as two types: over-investment and under-investment,and shows the characteristics of more serious under-investment problem.Therefore,the study of under-investment problem is more and more important.The special condition of our country determines that we must combine internal and external factors to improve investment efficiency accounting conservatism and creditor’s rights governance are the important factors inside and outside of enterprises affecting investment efficiency.Accounting conservatism can be used as a powerful reference to measure the quality of financial information of enterprises.It can help enterprises better manage and control financial risks,reduce the degree of information asymmetry,alleviate agency conflicts,promote the balance of interests of all parties,and limit operators’ non-compliance behaviors,so as to improve the efficiency of investment.As an important external corporate governance mechanism,debt governance is closely related to corporate free cash flow,which can effectively improve the phenomenon of information asymmetry,make the relevant parties of debt contract more transparent,and significantly improve the efficiency of investment.In view of the role of accounting conservatism on under-investment needs to be further studied,and from the perspective of creditor’s rights governance to study the impact of accounting conservatism on under-investment literature is even less.Therefore,A-share listed companies in Shanghai and Shenzhen from 2007 to2020 are selected as research samples to test the role of accounting conservatism on under-investment and the influence of debt governance on under-investment.Debt governance is selected as A moderating variable to test how debt governance mechanism affects the relationship between accounting conservatism and under-investment.The Heckman two-stage model is used to carry out the regression and replace the measurement methods of investment efficiency of dependent variable and creditor’s rights governance of regulating variable to carry out the robustness test to ensure the reliability of the research results.In addition,further research is carried out to distinguish the types of creditor’s rights and the properties of property rights,so as to explore what kind of creditor’s rights play the main regulatory role and what kind of enterprises in which creditor’s rights governance can play a significant regulatory role.The results show that:(1)accounting conservatism can aggravate under-investment;(2)debt management can alleviate under-investment;(3)creditor’s rights governance,as a moderating variable,strengthens the role of accounting conservatism in exacerbating under-investment and plays a governance effect.Further research shows that there are differences in the regulatory effects of different kinds of creditor’s rights.Bank loans and corporate bonds have significant positive regulatory effects,while commercial credit has no significant regulatory effects,indicating that bank loans and corporate bonds play a major role in corporate governance,and the strengthening of accounting conservatism aggravates under-investment on the whole.After distinguishing the nature of property rights,it is found that the governance of creditor’s rights in non-state-owned enterprises has a significant regulating effect,while that in state-owned enterprises is not significant.This paper provides theoretical basis for enterprises to manage inefficient investment and has practical significance for companies to choose appropriate capital structure and moderate conservatism policy.