Accounting Conservatism and Corporate Financial Constraint -A Research Based on Two Conservatism Perspectives

This paper measured the accounting conservatism levels of 765 listed corporations between 2003 and 2010 through models such as cumulative accrual and income-expense matching, and adopted multi-index Logit regression to estimate the levels of corporate financial constraint, and found that enhancing the level of accounting conservatism can significantly lower corporate financial constraint. Furthermore, by dividing conservatism into conditional conservatism and non-conditional conservatism, it is discovered that non-conditional conservatism is endogenous to accounting system which can better alleviate corporate financial constraint than post-event conditional conservatism. The conclusions will inspire the listed corporations to improve accounting information quality for decreasing financial constraint.