Although internal control over financial reporting has gained increasing regulatory attention, its enforcement is far from perfect; thus, firm-specific incentives to management become important to increase the quality of financial reports. We study how owners can motivate managers to invest in accounting quality even though it is costly to the managers. Using an agency model, we establish that a sufficiently conservative accounting system (which understates performance) is necessary to induce a manager to invest in accounting quality, and more conservatism increases this investment. The reason is that higher accounting quality mitigates the expected reduction of the manager's compensation from conservatively measured performance. Higher accounting quality makes the performance measure more precise, and the owner optimally lowers incentives, even though that entails some loss of productivity. In total, more conservatism increases both firm value and accounting quality. Our findings suggest that striving for neutral accounting can counteract incentives to improve accounting quality, and they provide support to using conservatism as a metric of financial reporting quality in empirical studies.

中文翻译：

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激励管理人员投资于会计质量：保守会计的作用*

尽管财务报告内部控制越来越受到监管部门的关注，但其执行还远未完善；因此，公司特定的管理层激励对于提高财务报告的质量变得很重要。我们研究所有者如何激励管理者投资于会计质量，即使这对管理者来说是昂贵的。使用代理模型，我们确定一个足够保守的会计系统（它低估了绩效）对于诱导经理投资于会计质量是必要的，而更多的保守主义会增加这种投资。原因是较高的会计质量减轻了经理薪酬与保守衡量业绩的预期减少。更高的会计质量使绩效衡量更加精确，所有者最优地降低激励，尽管这会导致一些生产力损失。总的来说，更多的保守主义会提高公司价值和会计质量。我们的研究结果表明，争取中立会计可以抵消提高会计质量的激励措施，并且它们为在实证研究中使用保守主义作为财务报告质量的衡量标准提供了支持。