Operational Mechanism of Accounting Conservatism

As a governance mechanism,the operating mechanism of accounting conservatism is the combined effects of internal and external governance environment.Based on the perspective of investor protection,we make a systematical survey on the literature of accounting conservatism at home and abroad in terms of the institutional environment,corporate governance and corporate characteristics.The study reveals that focusing only on the accounting standards changes in accounting conservatism does not improve the quality of accounting information,and accounting conservatism and effective governance mechanisms need to be matched by a strong legal and enforcement mechanism.Therefore,in the process of convergence of accounting standards in China with those of the western developed countries,we should give full consideration to the special system environment in the use of accounting conservatism and try to reform domestic institutions in this regard,such as the implementation of legal environment,corporate governance,which is significantly important to improve the quality of accounting information.