The Research On The Influence Of Institutional Environment And The Audit Opinion On The Trade Credit Financing Costs

With the development of market economy, trade credit have become an integralpart of it. As the most basic form of society’s credit, trade credit plays a key role inthe establishment of the whole social credit system. Trade credit is an important wayto obtain external finance for enterprises, especially for small and medium-sizedenterprise with credit constraints. Under the background of bank credit crunch, as akind of short-term financing channels, trade credit financing can ease the enterprisefinancing constraints. Thus studying on the enterprise commercial credit financinghas important implications.Based on the transaction cost theory, information asymmetry theory andsignaling theory, firstly,the paper analyzed that how the institutional environmentand the audit opinion have the influence on the enterprises’ trade credit financingcosts.Then taking3272samples in Shanghai A-share listed companies from2008to2011as samples, this paper analyzed the institutional environment and the auditopinion’s effect on the trade credit financing costs. The conclusions are as follows.First of all, institutional environment can reduce the cost of the trade credit financing.Secondly, the audit opinion will significantly affect the commercial credit financingcosts. That is to say, when the company received a standard audit opinion, commercialcredit financing costs would be also reduced notably. Thirdly, the institutionalenvironment and the audit opinion have an alternative relationship in cutting the costof trade credit obtained by firms,which means only in the areas of poor institutionalenvironment,the standard audit opinion can significantly reduce the company’s tradecredit financing costs. Further，compared with large companies, the audit opinion andthe institutional environment affect small and medium size business remarkably.Finally, relative to the state-owned enterprises, the cost of financing of privateenterprises is more easily affected by the local institutional environment perfectdegree; But suppliers such as creditors, in the process of decision making, will paymore attention to the auditing opinions of state-owned enterprises, and not tooconcerned about the auditing opinions of private enterprises.According to the result of the research, by defining the relationship betweengovernment and market, promoting the development of the financial market,perfecting the legal system, increasing penalties for dishonest ACTS, constructing good social credit system and vigorously developing intermediary institutions, we canimprove the level of enterprise’s trade credit financing.