Loss Listed Companies Debt Costs And Accounting Conservatism Of Related Research

Conservatism is a important characteristics of accounting information quality, basu (1997) point out that accounting conservatism affect accounting practice at least500years.Accounting conservatism means that the accountant’s tendency to require a higher degree of verification to recognize good news as gains than to recognize bad news as losses.As one of the main users of accounting statements, the creditors wish they can get the signal timely when there is a financial disaster occur in their on the debtors. With the need of the disaster singal, creditors expect strongly that the debtors accounting information should be conservative.The article give a overall analysis of the relations between the cost of debt and the accounting conservatism of Chinese listed companies. At first, the article review the related documents and introduces the correlation concept. Then,the article anlysis the way that accounting conservatism influence the debt cost. Nest, the article use a game modle to analysis the mechanism of that conservatism influence the debt cost At last, the article select the losing enterprises samples from the a-share listed on the stock exchange of Shenzhen and Shanghai, and divided them into3groups according to the time span of their continuous loss. Though accrual-cash flow model and accrual measure model, I analysis the asymmetrical timeliness and the asymmetrical persistence differences between each group, and use it to measure their accounting conservatism. On this basis, I regress debt costs to accounting conservatism to find the relation between them.Through empirical analysis, this paper draw the following results:(1) The degree of conservative of accounting information of losing enterprises is relative with the time span of their continuous loss. The enterprises which their losing time last only one year is conservative. The enterprises which their losing time last over one year is unconservative;(2) The accounting conservatism of losing enterprises is mainly reflected on non-operation accrued items;(3) The debt cost of losing enterprises is highly related to non operation accruals.The innovation of this article is:(1)I analysis the relations between the cost of debt and the accounting conservatism by the asymmetric information theory, agency theory and debt contract theory for the first time, I analysis the mechanism between the cost of debt and the accounting conservatism by the game theory for the first time;(2)On the basis of analysis of the each component for the surplus, I suggest a new method named Accrual-Cash flow Model to measure the degree of the accounting conservatism. The data were selected as I consider the influence of the profit manipulation of the company and the right of put option。...