This study examined the association of accounting conservatism with investment efficiency, and its effects on investment efficiency by mitigating firms from under and over investments of listed companies in China (2002 to 2013). First, we find the existence of conservatism in accounting practices of Chinese firms, later to hypothesize that how conservatism improves investment efficiency to alleviate under or over investment stresses. Thus, our findings confirmed that accounting conservatism improves investment efficiency of Chinese firms by mitigating under (over) investments. Furthermore, significant correlation existed for investment efficiency with free cash flow and corporate governance such as CEO duality and percentage of board members. In robust test, we find conservatism reduces the CEO duality and top one shareholder tunneling effect which may cause agency problem.
| Published in | International Journal of Business and Economics Research (Volume 5, Issue 4) |
| DOI | 10.11648/j.ijber.20160504.12 |
| Page(s) | 85-94 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2016. Published by Science Publishing Group |
Accounting Conservatism, Investment Efficiency, Overinvestment, Underinvestment
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APA Style
Naveed Razzaq, Zhang Rui, Zou Donghua. (2016). Accounting Conservatism Alleviates Firm’s Investment Efficiency: An Evidence from China. International Journal of Business and Economics Research, 5(4), 85-94. https://doi.org/10.11648/j.ijber.20160504.12
ACS Style
Naveed Razzaq; Zhang Rui; Zou Donghua. Accounting Conservatism Alleviates Firm’s Investment Efficiency: An Evidence from China. Int. J. Bus. Econ. Res. 2016, 5(4), 85-94. doi: 10.11648/j.ijber.20160504.12
AMA Style
Naveed Razzaq, Zhang Rui, Zou Donghua. Accounting Conservatism Alleviates Firm’s Investment Efficiency: An Evidence from China. Int J Bus Econ Res. 2016;5(4):85-94. doi: 10.11648/j.ijber.20160504.12
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Download@article{10.11648/j.ijber.20160504.12,
author = {Naveed Razzaq and Zhang Rui and Zou Donghua},
title = {Accounting Conservatism Alleviates Firm’s Investment Efficiency: An Evidence from China},
journal = {International Journal of Business and Economics Research},
volume = {5},
number = {4},
pages = {85-94},
doi = {10.11648/j.ijber.20160504.12},
url = {https://doi.org/10.11648/j.ijber.20160504.12},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20160504.12},
abstract = {This study examined the association of accounting conservatism with investment efficiency, and its effects on investment efficiency by mitigating firms from under and over investments of listed companies in China (2002 to 2013). First, we find the existence of conservatism in accounting practices of Chinese firms, later to hypothesize that how conservatism improves investment efficiency to alleviate under or over investment stresses. Thus, our findings confirmed that accounting conservatism improves investment efficiency of Chinese firms by mitigating under (over) investments. Furthermore, significant correlation existed for investment efficiency with free cash flow and corporate governance such as CEO duality and percentage of board members. In robust test, we find conservatism reduces the CEO duality and top one shareholder tunneling effect which may cause agency problem.},
year = {2016}
}
TY - JOUR T1 - Accounting Conservatism Alleviates Firm’s Investment Efficiency: An Evidence from China AU - Naveed Razzaq AU - Zhang Rui AU - Zou Donghua Y1 - 2016/07/15 PY - 2016 N1 - https://doi.org/10.11648/j.ijber.20160504.12 DO - 10.11648/j.ijber.20160504.12 T2 - International Journal of Business and Economics Research JF - International Journal of Business and Economics Research JO - International Journal of Business and Economics Research SP - 85 EP - 94 PB - Science Publishing Group SN - 2328-756X UR - https://doi.org/10.11648/j.ijber.20160504.12 AB - This study examined the association of accounting conservatism with investment efficiency, and its effects on investment efficiency by mitigating firms from under and over investments of listed companies in China (2002 to 2013). First, we find the existence of conservatism in accounting practices of Chinese firms, later to hypothesize that how conservatism improves investment efficiency to alleviate under or over investment stresses. Thus, our findings confirmed that accounting conservatism improves investment efficiency of Chinese firms by mitigating under (over) investments. Furthermore, significant correlation existed for investment efficiency with free cash flow and corporate governance such as CEO duality and percentage of board members. In robust test, we find conservatism reduces the CEO duality and top one shareholder tunneling effect which may cause agency problem. VL - 5 IS - 4 ER -
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