e-journal

Accounting conservatism, ultimate ownership and investment efficiency

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Purpose – The purpose of this paper is to analyze and examine the role of accounting conservatism
on firm investment behavior in China.
Design/methodology/approach – By combining a developed theoretical framework and empirical
study, this paper examines the impacts of accounting conservatism on firm investment. The sample
and data are all collected from Wind and CAMAR databases.
Findings – The paper finds that the association between accounting conservatism and capital
expenditure is significantly positive when inside capital is not enough to use for investment, suggesting
that conservatism can expend the level of investment by decreasing information asymmetry and cost of
capital; however, the association between accounting conservatism and capital expenditure is
significantly negative when inside capital is enough to use for investment, suggesting that conservatism
can curtail the level of investment by mitigating the interest conflicts between management and outside
shareholders and decreasing agency costs. Additionally, the paper finds that the severity of information
asymmetry and agency problem affects the role of accounting conservatism on firm investment
behaviour, and the association between accounting conservatism and capital expenditure is weaker for
firms with ultimate ownership controller as local government or individuals.
Originality/value – This is the first paper to analyze and examine the impacts of accounting
conservatism on firm investment in China directly. The findings are also useful to explain the
awkward predicament found by prior literature.

Keywords Accounting conservatism, Investments, Information asymmetry, Agency cost, Cost of capital, Ultimate ownership

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Ketersediaan

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Informasi Detail

Judul Seri

China Finance Review International

No. Panggil

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Penerbit

: Emeral Group., 2012

Deskripsi Fisik

China Finance Review International Vol. 2 No. 1, 2012 pp. 53-77

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

Lampiran Berkas

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