Research On Debt Financing?Earnings Quality And Capital Allocation Efficiency

Earnings quality is the most important part of the quality of accounting information,which can directly reflect the profitability,solvency and other financial information of an enterprise,and is an important basis for creditors to make credit decisions and investors to make investment decisions.Existing studies have confirmed that high-quality earnings information can reduce the information asymmetry between information supply and demand and improve the efficiency of resource allocation.Debt financing also imposes external constraints on companies to improve the quality of governance and earnings.The relationship between earnings quality and debt reflects the governance role played by creditor's rights,so creditors can judge the governance effect of debt contract according to the relationship between earnings quality and debt financing.However,there are few literatures to comprehensively and systematically analyze the impact of debt financing and earnings quality on capital allocation efficiency of listed companies.Therefore,based on the theoretical analysis and the research hypothesis,in Richardson,on the basis of the model and the extended Jones model through multiple linear regression analysis,the following four aspects the question has carried on the empirical research: one is the quality of surplus on the capital allocation efficiency and the influence of these effects in the inadequate investment and excessive investment company is different;The second is to study the impact of earnings quality on the efficiency of capital allocation(inefficient investment,underinvestment and overinvestment)from the financing constraint path,agency conflict path and the dual path of financing constraint and agency conflict.Third,based on the governance effect of debt financing scale and earnings quality,explore whether they promote each other or restrict each other,and then test the impact of the multiplicative item of the two on the efficiency of capital allocation.Fourth,based on the governance effect of different types of debt financing,this paper explores whether different types of debt financing have different effects on earnings quality and capital allocation efficiency.Through empirical test,the main research conclusions of this paper are as follows:(1)Earnings quality is significantly positively correlated with capital allocation efficiency,and this relationship is different in different enterprises.Compared with state-owned enterprises,earnings quality plays a more significant role in promoting capital allocation efficiency in non-state enterprises.Grouping test shows that when the earnings quality of underinvested and over-invested companies improves,the phenomenon of underinvestment or over-investment will be alleviated.When the nature of the firm is added,the moderating effect of earnings quality on underinvestment will be reduced,and the inhibiting effect on over-investment will also be reduced.(2)High quality earnings information can improve investment efficiency by alleviating financing constraints and reducing agency conflicts.The mediating effect of financing constraint on the mechanism of earnings quality affecting underinvestment is more significant than that on the mechanism of earnings information quality affecting overinvestment.Agency conflict has a small partial mediating effect on the mechanism of earnings quality affecting underinvestment,while agency conflict has a significant partial mediating effect on the mechanism of earnings quality affecting overinvestment.(3)There is an inverted "U" shaped relationship between debt financing ratio and capital allocation efficiency.Further dividing the samples into two sub-samples,underinvestment and overinvestment,the research finds that the debt financing ratio has a "U" shaped relationship with underinvestment and an inverted "U" shaped relationship with overinvestment.(4)with the percentage of debt financing to improve the quality of surplus on the capital allocation efficiency will strengthen the influence of;However,when the debt financing ratio increases to a certain extent,the adjustment effect of the debt financing ratio on the quality of earnings and the efficiency of capital allocation will be significantly weakened.Further to make the sample is divided into investment shortage and excessive two child samples tested respectively,the study found that: the more debt financing ratio,the company to be the existence of less investment,but will be excessive investment,with increasing the proportion of debt financing,the surplus quality for relief of inadequate investment effect will be weakened,the surplus quality about overinvestment inhibition and reduces,and the proportion of debt financing to curb overinvestment surplus quality effect more apparent.Based on the conclusion from the paper,the company should reasonable arrangement of debt financing scale and various types of debt financing,strengthen the construction of internal control,perfect the internal governance structure,improve the quality of earnings information,thereby reduce the expected return of outside investors,reduce the degree of financing constraints faced by companies,reduce the firm's investment is insufficient,improve the company's capital allocation efficiency.The state not only needs to optimize the investment and financing market environment and improve the governance effectiveness of debt financing,but also needs to strengthen the top-level design of financial supervision and policy information disclosure mechanism,curb earnings management activities and reduce opportunistic behaviors of enterprises.