Regional accounting conservatism and macroeconomic growth: evidence from China

The quality of accounting information determines whether such information can serve as an effective basis for rational macroeconomic regulation and investment decisions. Studying accounting conservatism is crucial because it plays a pivotal role in shaping the macroeconomic landscape. This study examines the impact of accounting conservatism on the speed and quality of macroeconomic growth in emerging markets. Our findings indicate that regional accounting conservatism can hinder the speed of macroeconomic growth but enhance its overall quality. This effect is channelled primarily through aggregate corporate profits, total factor productivity level, and dispersion. Further analysis reveals that this relationship is more pronounced in regions characterised by high financial marketisation, weak government intervention, and well-developed intermediary markets. This study significantly enriches our understanding of the macroeconomic consequences of accounting conservatism in emerging markets and provides valuable insights into future macroeconomic trends at both the quantitative and qualitative levels.