Research For Listed Company’s Debt Financing And Earnings Quality

In2008, the US economic crisis triggered by subprime mortgage swept the globe, financial security was pushed to the forefront and became the focus of the government, enterprises, financial institutions and scholars. Currently, debt financing is the main financing way of our enterprises, every year, banks and other creditors supply huge credit funds to enterprises, due to poor management of enterprises, the phenomenon credit funds can’t recover occurs frequently, in order to reduce the credit risk, it requires banks and other creditors to strengthen the exante credit investigation and expost supervisory management. Creditors mainly use accounting statements to identify the debtors’financial formation such as financial strength, profitability and debt paying ability, therefore the accounting information’s reality and reliability will directly affect the credit decisions of creditors, the quality of earnings information is the most important indicator of the accounting information quality, which is the key for the creditors to recognize.On the one hand, the supervisory management of creditors, the weakening effect of debt to managements’interests occupation, the alleviating effect of debt to agency problems can all improve the enterprises’corporate governance level, and then improve the enterprises’earnings quality. On the other hand, the greater the degree of enterprises deviating from the debt contract is, the stronger the motivation it using accounting procedures to adjust earnings quality in the future to the current. Thus, debt financing has dual effects on earnings quality. This article selects all A-share listed companies’s financial data in our country ranging from2003to2011as research samples, based on debt contract hypothesis, debt actively monitoring hypothesis and debt financing constraint theory, this paper elaborates the relationship between debt finacing and earnings quality from the following three perspectives, overall debt financing, long-term debt financing and short-term debt financing. In view of our country is in the period of economic transition, which has special system background and economic policy, and it will affect the relationship between debt financing and earnings quality, so based on nature of property right, marketization process and monetary policy, this paper makes a deeper study on the relationship between the two.Research conclusions are as follows:Total debt and short-term debt both have a inverted "U" shaped relationship with earnings quality, while long-term debt have a negative relationship with earnings quality; After distinguishing the nature of property rights, total debt and short-term debt still have a inverted "U" shaped relationship both in state-owned enterprises and in non-state-owned enterprises, but relative to the non-state-owned enterprises, the negative correlations between long-term debt and earnings quality is reduced in the state-owned enterprises; The higher marketization weakens the positive correlation between total debt, short-term debt and earnings quality, while strengthens negative correlation between the total debt short-term debt, long-term debt and earnings quality; Monetary tightening enhances the positive correlation between total debt short-term debt and earnings quality, while weakens the negative correlation between total debt short-term debt, long-term debt and earnings quality.Based on the above research conclusions, this paper acquires the following enlightenments:We should raise debt financing of moderate scale to maximize creditor’s supervision and governance effect; China’s marketization process should be viewed of from two dialectical aspects; The unreasonable debt financing structure and government’s intervention to bank credit both restrict the exertion of creditors’supervision and governance effect; We should improve the system construction, and improve the system’s enforcement mechanisms.