Literature Review on the Economic Consequence of Accounting Conservatism

Literature review on the economic consequence of accounting conservatism at home and abroad is carried out from the perspective of investment and financing. It is found that accounting conservatism has a negative relation with financing cost. In this connection,enterprises should select more cautious and moderate accounting policies for raising financing efficiency with low cost. No consensus on the correlation between accounting conservatism and investment efficiency is achieved in current literature. When investigating the influence of accounting conservatism on financing cost, researchers usually focus on the influence on the debt cost; less researches are conducted on stock right cost relevance. As there is no unanimous conclusion as to the economic consequence of accounting conservatism, more efforts could be put on it in future researches, which will help public listed companies increase the accounting information quality.