Property Right, Accounting Conservatism And Bank Adverse Selection

This study is based on the Information Asymmetry Theory, Creditor Protection Theory,and combined with our country’s special background that is in the economic transitionperiod, to establish the analysis framework of the whole text. By using the data of ChineseA-listed companies during the2005-2010periods, it empirically analyzes the relationshipbetween the nature of property right, accounting conservatism and adverse selection of thebank. Specifically, by using the negative of non-operation accruals and MTB as themeasure of accounting conservatism, to investigate the nature of property right, accountingconservatism’s affection on the proportion of new bank loans, the capital cost of loans andthe proportion of long-term loans.This study finds that accounting conservatism has positive relationship with the proportionof new bank loans and long-term loans, and has negative relationship with the capital costof loans in the non-state-owned holding listed companies. That is, the more conservative ofthe listed company, the easier to obtain new bank loans, the easier to obtain low cost loans,the easier to obtain long-term bank loans. Accounting conservatism reduced the adverseselection of the bank. But in the state-owned holding listed companies, it doesn’t found therelationship between accounting conservatism and the proportion of new bank loans.Accounting conservatism is negatively related to the capital cost of loans, but its relevanceto less than that in the non-state-owned holding listed companies. Accounting conservatismis negatively related to the proportion of long-term loans. In our country, because ofgovernment intervention, the government’s recessive guarantee, relationship financingproblems, etc, state-owned holding weakens the role of accounting conservatism inreducing bank adverse selection. At last, according to the research conclusions, this papergets some enlightenment, and puts forward some policy suggestions.