An Empirical Study On The Relationship Between Accounting Information And Capital Allocation

Equity capital, credit capital and debt capital are the important source of enterprise funds. The efficient allocation of capital is significance for companies, investors and economies. Thirty years of reform and opening up, China has gradually established stock and bond markets, and promote market-oriented reform of the banking sector, and started to use the market to allocate capital. The development of stock market has encountered a bottleneck, and the development of bond market is slow, and the allocation of credit capital is facing a severe credit rationing phenomenon. The situation of capital allocation is not optimistic. The information problems and agency problems intertwined with China "emerging and transitional" system background, so that the problem of capital allocation becomes more complicated. Existing research shows that the accounting information and institutional environment also has an important effect on the allocation of capital. However, the specific mechanism of the accounting information affect the capital allocation remains’a "black box". It lacked the positive and empirical research. Considering the strong interaction between the financial accounting system and other institutional environment, research should pay attention to the system environment impact on the capital allocation role of accounting information. In this context, we should analyze the accounting information affect the micro-mechanism of capital allocation, and institutional environment for the role of accounting information on capital allocation. This has important theoretical and practical significance for improving the allocation of capital, improve the institutional environmental reforms and accounting information supply and so on.In this paper, the research content includes:(1)On the basis of the accounting information relevant literature, using the theory of asymmetric information and agency theory, from the information problems and problems, put forward the micro-mechanism of capital allocation function of accounting information.(2) Combined with China’s "emerging and transitional" system context, use of the theory of institutional economics, it analyzes the impact of the institutional environment on the role of accounting information. (3)On the basis of compare the relevant measurement method, we chose accruals model to measure the quality of accounting information, chose the probability of informed trading of market microstructure theory to measure information asymmetry, chose a market index to measure the degree of market institutional environment, the level of financial development and legal environment. These analyzes provide a key variable in empirical research. (4) Respectively in the view of equity capital, credit capital and debt capital, we analyzed the impact of accounting information in the microscopic mechanism of capital allocation, and institutional environment for the role of accounting information on capital allocation, and use the data of Chinese listed companies and corporate bonds made an empirical test.(5) According to the conclusions of theoretical analysis and empirical research, we put forward the corresponding policy recommendations for expand the economic performance of accounting information, improve the supply of accounting information, perfecting the system environment, optimize capital allocation and so on.In this paper, we draw the following conclusions:(1) Accounting information can alleviate the problem of information through the information effect; can also alleviate the agency problem through treatment effect. And promote optimized allocation of capital. (2) In the Chinese system background of "emerging and transitional", institutional environment have a major impact on capital allocation role of accounting information, its effect may be "complementary", also may be "alternative". (3) In the equity capital markets, accounting information can play a role in the allocation of capital, by affecting the cost of equity capital. Further, in the microscopic mechanism, Information effect is greater than the effect of governance. Accounting information and institutional environment exhibit "complementary" relationship. (4) In the credit markets, accounting information play a role in the allocation of capital, by affecting the average cost of debt. In the microscopic mechanism, the effect of treatment effect is greater than the information. Accounting information and institutional environment exhibit "complementary" relationship. Moreover, accounting information can affect the availability of debt and debt maturity structure (5) In the bond market, accounting information play a role in the allocation of capital, by affecting the bond costs. Further, in the microscopic mechanism, Information effect is greater than the effect of governance. Accounting information and institutional environment exhibit "alternative" relationship. Moreover, accounting information can affect the bond credit rating. (6) The role of accounting information in equity capital, credit capital, debt capital allocation, there are similarities and differences.The innovation of this paper are the following four aspects:(1) Based on the related literature of accounting information on economic performance, from the information problems and problems, further analyzes the accounting information affect the micro-mechanism of capital allocation. (2)Based on China’s system of " emerging and transitional " background, combined with the property of equity capital, credit capital and debt capital, we provide institutional environment have a major impact on capital allocation role of accounting information, its effect may be "complementary", also may be "alternative".(3)Combination of equity capital, credit capital and debt capital, we theoretically analyzes the similarities and differences in accounting information in three categories of capital allocation, and provide a corresponding difference in empirical evidence.(4)We separate the information effect and governance effect of accounting information, and provide the new evidence about the relative size of information effect and governance effect. This helps to explain a "black box" of the role of accounting information, has important theoretical and practical significance.