بازنگری محافظه کاری حسابداری مشروط در شرکت های تحت کنترل دولتی Revisiting Conditional Accounting Conservatism in State-controlled Firms

1. Introduction The existing literature documents that Chinese state-owned firms do not have significant levels of conditional accounting conservatism [1] (conditional conservatism hereafter) primarily due to the low demand for conservatism from the debt or bank loan market (see Chen et al., 2010). If other determinants of conditional conservatism such as litigation, regulation or tax (see Watts, 2003; Garcia Lara et al., 2009) are assumed constant, the contracting determinant encompasses more than debt contracting. Little research is conducted on the conditional conservatism in Chinese state-controlled firms with no debt. This study attempts to explore additional dimensions of contracting determinant that could induce conditional conservatism in state-controlled firms, specifically examining the equity demand for conditional conservatism [2]. Along with the debt market demand for conditional conservatism, equity investors can demand accounting conservatism because it allows shareholders to mitigate managerial motivations of opportunistic activities such as expropriation and/or poor project selection (Watts, 2003). Investigating a subsample of US firms with zero leverage, Louis and Urcan (2015) find these firms also exhibit conditional conservatism. They attribute this result to the demand for conditional conservatism from equity investors and suggest that shareholders demand accounting conservatism to mitigate agency conflicts between shareholders and managers. The investor attraction perspective is another dimension of the equity-market demand for conditional conservatism (Hirshleifer and Teoh, 2009). This view argues that individuals process gains and losses differently (Dickhaut et al., 2010), and the relative disappointment from losses exceeds the benefits of gains. Therefore, investors would demand for conditional conservatism because conditional conservatism may reduce the likelihood of future disappointments.