A Study Of The Relationship Between Accounting Conservation Of Listed Companies And Bank Loans

This study makes the stocks of companies listed in Shanghai and Shenzhen stock markets as the objects of study to examine if banks would prefer companies with high accounting conservation and then incorporate the result into the process of determining the amount and cost of debts. Specifically, we examine the effects of the previous year's accounting conservation on the current year's amount and cost of debts obtained from banks.According to the study, we find that there is significant positive relationship between accounting conservation of listed companies and the loan amounts, either under the situation of the total samples, or of the long-term debts, or of the credit loans, or of loans obtained from joint-equity banks. Also, there is significant negative relationship between accounting conservation of listed companies and the cost of debts of all types of the loans. From the results, we can tell that banks in our country do take the accounting conservation factor into consideration setting interest rate and determining the loan amounts. That is to say, it is for companies with high accounting conservation to obtain more loans from banks or have a lower debt cost.Based on the conclusion of our study, we suggest that companies that need to obtain loans from banks should consider pursuing more conservative accounting policies.