Accounting conservatism and disposition effect

The financial crisis in 2008 caused a worldwide economic disruption, and also led to growing in-depth thinking. This article considers the governance role of the accounting conservatism on capital market irrational behavior, the disposition effect, from the angle of accounting. We find that conservatism has apparently offset the effect of “overestimate “and “underestimate” caused by the disposition effect. From an accounting level, we find the governance mechanisms of compensating the inaccurate pricing of market, and the research provides a powerful basis for investors, market regulators and standard setters.