Degree of Separation of Two Rights and Conditional Conservatism

This paper examines the relationship of separation of ownership that is separation of control right and cash flow right and conditional conservatism. We set China \´s A-share listed company on the Main Board of 2004-2009 as the sample. We predict and find that the relationship is affected by the control right interval effect. 1)There is no significant correlation between the separation of ownership and conditional conservatism under the low level of control right. 2) As the rising of control right, there is a significant positive correlation between them. 3) As the rising of control right to absolute control, there is a significant negative correlation between them. The result also show that cash flow has "incentive effect" that it can significantly enhance conditional conservatism.