Study Of The Relationship Between Accounting Conservatisn And Cost Of Debt In Chinese Listed Companies

Accounting conservatism is a basic principle in accounting theory and practice, it has a profound historical background and has deep impact to the accounting practices of many countries. Therefore, studies on accounting conservatism remain hot and there are many studies about the causes, measurement and impact factors of accounting conservatism, there's yet a very lack of empirical studies on the economic consequences of accounting conservatism in China.As a corporate co-ordination mechanism for the parties to a conflict of interest, accounting conservatism can effectively lower the parties of the corporate to the contract agency costs, the capital market of China to improve accounting conservatism has its practical significance. This research is to study the relationship between Accounting Conservatism and cost of debt in Chinese listed companies. According to statistics, the proportion of business loans are generally accounted for more than 50%, debt financing is still the main source of financing of listed companies in China, so the cost of debt immediately concerns the efficiency of financing. However, shareholders and managers maybe have moral risks and opportunistic behaviors, they make the company debt covenants in the parties to conflict of interest. But conservative accounting information can ease the conflict between shareholders and creditors, it has important theoretical value and practical value to study the relationship.The paper runs mainly in empirical way, with necessary explanation and analysis, it studies the relationship between accounting conservatism and cost of debt of Chinese listed companies by theoretical and empirical studies. Based on the data of A-share companies listed on the Shanghai and Shenzhen stock exchanges between 2007 and 2009,this article tests the economic consequences of accounting conservatism and analyzes the relationship between accounting conservatism and cost of debt. In terms of the measurements of accounting conservatism, this paper uses basu's earnings - stock return measurement and the accruals measurement, then it analysis the effects that accounting conservatism brings to the cost of debt by establishing the regression model of cost of debt. Empirical result shows: when we controlled Size, Lev, ROA, Debt After controlling Size, Lev, ROA, Debt and other factors, the cost of debt of listed companies has negative correlation with accounting conservatism, that is, the higher the accounting conservatism ,the lower the cost of debt in Chinese listed companies.