Research on the Relationship between Controlling Shareholder and Accounting Conservatism in China

Abstract:

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In this paper, we examined the relationship between controlling shareholders and accounting conservatism in China. Using 5762 firm-years data about listed firms in China stock exchanges from 2001 to 2005, we find that the percentage of the largest shareholder ownership has significantly negative effect on accounting conservatism. After controlled by size, leverage and growth opportunity, the result is still robust. We thus provide evidence of an entrenchment effect, where the largest shareholder may influence firms to adopt aggressive accounting policies that reflect the wishes of the largest shareholder rather than reflect the economic substance of the business transactions.

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Periodical:

Edited by:

Zhenyu Du and Bin Liu

Pages:

579-584

DOI:

10.4028/www.scientific.net/AMM.65.579

Citation:

Y. L. Wu "Research on the Relationship between Controlling Shareholder and Accounting Conservatism in China", Applied Mechanics and Materials, Vol. 65, pp. 579-584, 2011

Online since:

June 2011

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$35.00

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