The Study of Accounting Conservatism after the Promulgation of New Accounting Standards for Enterprises - Based on the Evidence in China’s Capital Market

Abstract

The accounting conservatism is the important topic of academic research in China and other countries, the Ministry of Finance promulgated accounting standards for enterprises which looks upon accounting conservatism as one of the principles for the first time in November, 1992 in China. And the Ministry of Finance issued a new Accounting Standards for Enterprises which regards the accounting conservatism as the quality requirements of accounting information in February, 2006. Thus the importance of accounting conservatism can be vividly seen. This paper uses the companies as the research samples after the implementation the new accounting standards for enterprises promulgated, that is to say, I choose the data from 2008 to 2011 for 4 years as research samples. Using Ball and Shivakumar’s (2005) accrued - cash flow model, but the model was modified, specific practice is to divide accruals into discretionary accrual items and non-discretionary accrual items, the results of multiple regression show that China’s accounting earnings is conservative, but accounting conservatism stems from non-manipulative accruals.