Auditor Size, Auditor Tenure And Financing Cost Of Bank Loan

In this paper, under the background of economic transition in China, influenced by legaland market environment in our country, bank loans financing occupies absolute proportion inthe total enterprises financing. Bank loan financing is financing that has good elasticity, quickspeed, can give full play to the characteristics of financial leverage, and thus become a themost commonly used mode of financing in our country companies. With the deepening offinancial reform in our country, however, the threshold of the enterprise from bank loans havebeen increased. Many companies because of the funds are not in place in time lead to capitalchain rupture, as a result, many companies in order to get more bank loans financing, at fraud,whitewash financial statements to defraud the trust of the bank. These facts show that gettinga bank loan financing is very important to our country enterprise’s survival and development.In2008, the global financial crisis, the fuse came from the United States subprime loansof commercial Banks. Subprime mortgage crisis and caused by the global financial crisisshowed that many countries commercial Banks in risk identification, assessment and controlof serious problems existing in the process, needs to be continually improved. If the creditrisk management of commercial Banks, they can cause significant adverse impact to thedomestic and foreign economic. Even though the world financial crisis impact on China’sbanking industry is limited, but the non-performing loans of commercial Banks in Chinacompared with developed countries, it remains to be reduced. In addition, our countrycommercial bank credit risk control mechanism is not perfect enough, so our countrycommercial bank risk management problems still need our special attention.Under this economic background, research relationship between auditor characteristicsand bank loans financing cost, and find the auditor characteristics factors affecting bank loansfinancing costs will have a double meaning. Can not only reduce loan financing costs for theenterprise, find a feasible way to control financial risk, but also help the bank know forauditor characteristics of different credit risk arising from the differences, so as to optimizethe credit decision-making, strengthen the credit risk control level.This article through the establishment of a bank loan financing costs of multivariatelinear model, to test the influence of two types of auditor characteristics, namely the auditor size and auditor tenure on bank loans financing costs, using OLS regression method forregression testing. Results indicate that: first of all, the auditor size and bank loans financingcosts, there is a significant negative correlation relationship between embodied in when theauditor for the "top ten", bank loans financing costs will be lower. Second, auditor tenure andbank loans financing costs, significant negative correlation between concrete manifestationfor clients to keep a long-term business relationship between the auditor and lowers theborrower’s bank loan financing costs.This article conclusion enlightenment to our country enterprise should realize the auditorcharacteristics in the enterprises to obtain bank loan financing, the role of, especially theauditor size and auditor tenure is a bank loan increment of lower credit risk factors on themarket, when conditions permit, consider hiring more larger scale accounting firm, ormaintain with the current auditor long-term business relations, in order to get high qualityaudit report, thus reduce loan financing costs.