Accounting Conservatism and Disposition Effect
The current financial crisis which began in 2008 created economic disruption on a global level. This study investigates the effect of accounting conservatism on the disposition effect in the Chinese capital markets. Our research findings show accounting conservatism offsets “overestimation “and “underestimation” resulting from the disposition effect. From an accounting perspective, we find the governance role of conservatism may correct inaccurate market pricings; we believe this research provides knowledge that will assist investors and policy makers to understand accounting conservatism and make better decisions.