Does Financial Derivatives Regulation Affect Corporate Accounting Conservatism?

The recent financial crisis in 2008,the "Crude oil Treasure" event of Chinese bank futures products,and the exchange losses of cross-border investment enterprises all indicate that there is a grey area in China’s existing financial derivatives supervision system.With the expansion of cross-border investment in China,the acceleration of financial innovation and the increasing complexity of financial derivatives,the difficulty of supervision is also increasing.Therefore,in order to ensure the healthy and stable development of the financial market,the Chinese government needs to further strengthen the legal construction of the derivatives market and improve and optimize the supervision system.Accounting conservatism plays an important role in the healthy development of cross-border investment enterprises and the smooth and orderly operation of the capital market.High quality accounting information is an important basis for investors to make decisions in the financial derivatives market.This thesis takes Chinese listed cross-border investment companies from 2007 to 2019 as samples to study the impact of financial derivatives regulation on corporate accounting conservatism.It is found that financial derivatives regulation can significantly improve the accounting conservatism of cross-border investment enterprises.Compared with private enterprises,financial derivatives regulation has a greater effect on the accounting conservatism of state-owned enterprises,and a higher degree of equity balance can positively regulate the relationship between derivatives regulation and accounting conservatism.By analyzing its influence channels,it is found that financial derivatives regulation can improve accounting conservatism mainly by promoting enterprises to adopt hedging accounting standards,reducing the level of risk taking and increasing the awareness of prudence.Sample heterogeneity test shows that strengthening financial derivatives regulation has a greater effect on improving accounting conservatism of enterprises with high audit quality and enterprises with high local law enforcement level.This thesis not only enriches the literature on the economic consequences of financial regulation and the influencing factors of accounting conservatism,but also has important practical value for the government departments to optimize the relevant regulations of derivatives and for enterprises to improve accounting conservatism.