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Abstract: |
This paper examines that the accounting conservatism, as an effective mechanism of corporate governance and financial reporting mechanism, can enhance the value of cash holdings. Our study founds that, the higher the enterprise’s accounting conservatism, the higher the value of it’s cash holdings. Taking the institutional background into considering, further study shows that, for the enterprises of private property rights, the promotional effect of accounting conservatism on the value of cash holdings is significantly greater than it is in the state-owned enterprises. This study once again proved that accounting conservatism is effective in corporate governance, from the perspective of the value of cash holdings.
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