Study On The Relationship Between Debt Financing And Accounting Conservatism Of Chinese Private Listed Companies

Debt financing and accounting conservatism have been hot study points in the theory field. Under the Chinese specific system background, the difficulty for the private listed companies to finance becomes a quite common phenomenon. In the indirect financing, the unhealthy of the financial institution system will lead to financing difficulty of private companies; in the direct financing, the too high threshold of Chinese capital market and the harsh condition of bond market financing make it more difficult to finance. From the source of capital - the perspective of creditors, the creditors, for their own interest, are more likely to invest in a "relationship" of the company, and rarely make an investment decision based on company's financial position and operating results of the accounting information.In this paper, the financial crisis is used as the starting point and the paper tries to find some of the relationship between debt financing of Chinese private listed companies and the conservatism of accounting. I believe that the accounting information of Chinese private listed companies should be more robust after the financial crisis. Because of influence of the financial crisis, the benefit-correlations in a company are in demand of the conservatism of the accounting information. Meanwhile, from the economic consequences of the conservatism, robust accounting information can help private enterprises to get more funds to solve their financing problem.Based on this idea, this paper selected the Shanghai and Shenzhen Stock Exchange-listed A shares of private companies as samples from 2004 to 2006 and from 2009 to 2010 in China, and the Basu (1997) model is used and developed. The conservatism of accounting changes and characteristics is examined from the following three aspects:(1) whether the Chinese private listed companies exist accounting robust in general before the crisis and in post-crisis era? (2) How the debt financing will affect the accounting conservatism? (3) The year 2007 and 2008 are the outbreak period and the spread period of the world financial crisis. Take it as a watershed, before and after the two years, whether the private listed companies' accounting figures also show a different of conservatism?This study showed that:(1) in two different periods, the accounting conservatism generally exists. (2) the existence of debt will affect the conservatism of the accounting, the higher the companies' overall debt level, the more robust its accounting policies; In addition, the companies with a high proportion of short-term borrowing are more robust in accounting policies than the companies with a low proportion of short-term borrowing, on the contrast, the companies with a high proportion of long-term borrowing are less robust in accounting policies than the companies with a low proportion of long-term borrowing (3) compared with pre-crisis. conservatism of company accounting in post-crisis era declines.These research results indicate that after the financial crisis. Chinese private listed companies exist conservatism; debt, in a certain extent, can enhance the conservatism of the company accounting; after the shock of the financial crisis, the benign accounting conservatism has not been released, the conservatism of private listed companies decrease instead.