| Summary: | 碩士 === 靜宜大學 === 財務金融學系 === 103 === Dividend-paying firms mitigate the agency costs of free cash flow through dividend payments (Jensen, 1986). The essence of corporate governance itself is about dealing with agency problems. Accordingly, corporate governance and dividends are closely related. La Porta et al. (2000) propose two competing hypotheses: the outcome model and the substitute model. The outcome model predicts that corporate governance is positively related to dividends; instead the substitute model predicts a negative relationship between corporate governance and dividends. Watts (2003) and Chi et al. (2009) both find that conservative accounting facilitates less agency costs. As a result, poorly governed firms tend to adopt accounting conservatism (substitutive perspective) while complementary perspective asserts that well-governed firms have a tendency towards more conservative accounting (García Lara et al., 2009). Accordingly, the relations among corporate governance, dividends and accounting conservatism merit further depth investigation and evidence collection. However, the incorporation of corporate governance and dividends into the study of accounting conservatism is absent from the extant literature. This study accordingly incorporates dividends into the study of corporate governance and accounting conservatism. In other words, this study takes a deep investigation in whether the impact of corporate governance on the accounting conservatism depends on dividends (moderation effect). This is our contributions. Regarding the measurement of accounting conservatism, following the study of Khan and Watts (2009), this study estimates a firm-year measure of accounting conservatism (C-Score) using Taiwanese listed firms over the period of 2005 to 2013. The listed firms and collected variables are available in the database of the Taiwan Economic Journal (TEJ). In order to clarify the impact of full implementation of the International Financial Reporting Standard (IFRS) on the accounting conservatism since 2013, this study partitions our sample firms into sample firms including the period of 2013 and excluding the period of 2013 and reexamines the relationship among corporate governance, dividends and accounting conservatism. The results show that corporate governance is positively associated with accounting conservatism, which implies a firm with better governance has more conservative accounting, especially for the firms with extremely low accounting conservatism. This finding is consistent with assertion of García Lara et al. (2009) and thus is complementary perspective. Furthermore, we find the moderation effect of dividends exists, especially for the firms with extremely high accounting conservatism. That is, the impact of corporate governance on the accounting conservatism depends on the dividends. The paper makes a major contribution on the finding of moderation effect of dividends.
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