Audit Opinion、corporate Characteristics And Trade Credit Financing

With the improvement of capital market in China, equity financing and debtfinancing through stocks, bonds or bank credit has become a bridge connecting thesupply and demand sides of funds. It has improved the efficiency in the use of fundseffectively. However, China is still in a period of economic transformation.So thefinancial system is not very sound and the proportion of direct financing is low. At thesame time, bank credit is limited by financial constraints, which can not meet thefinancial needs of many businesses. Financing difficulties become one bottleneck forenterprise, especially for small enterprises and private enterprises.In this case,as animportant means of external financing, Trade Credit Financing can effectivelyalleviate the problem of financing constraints.The essence of Trade Credit Financingis a short-term, which is provided from supplier to downstream enterprises.TradeCredit Financing is a contractual relationship, caused by the difference of the time ofthe currency movement and physical movement and existing as a deferred payment orprepaid accounts. Trade credit financing as an effective alternative to credit financing,is accepted and applied by more and more enterprises.However, due to the problems of information asymmetry and the agencyproblems as shareholders or management’s embezzling of funds, how to reduce therisk of default become a key issue to the trade credit financing. Audit opinion issuedby CPA with a signaling effect solve the problem of the adverse selection and moralhazard, which can reduce the problems of information asymmetry between theupstream and downstream businesses and play a role in early warning of theinvestment risk.In addition, the audit opinion has the capabilities of oversight andforensic, so it can play an effective role to ensure the truth of the financial reportingand strengthen the confidence of financial information users. From the other side, italleviate the financing constraints caused by the information asymmetry andcommissioned agents. However, it lack of relevant empirical and theoretical researchwhether the audit opinion will effect the trade credit financing between the upstreamand downstream businesses or not, and which factors will impact the efficiency ofaffect.In this paper, it is studied from the view of corporate characteristics. Based on the reasons above，this paper use the financial data of Chinese listedfirms during2010-2012, and study the correlation of audit opinions and trade creditfinancing. Considering the macro environment and micro enterprises’ ability factor,we study the impact of corporate characteristics on the relationship between auditingopinion and commercial credit financing level with property right characteristics andposition features of the enterprise as the angle of view.The empirical results show thatwhen companies are given Modified Audit Opinions, the level of firm’s trade creditfinancing decrease significantly in the next year, being a negative correlation.Meanwhile, state property can significantly weaken the effect of Modified AuditOpinions to the level of trade credit financing.We find that, to non-state-ownedenterprises, firms’ market position can significantly weaken the effect of ModifiedAudit Opinions to the level of trade credit financing.It is said that, the suppliers payattention to the firms’ audit opinion and the state property when they draft the tradecredit policy, and firms’ market position will influence the efficiency of independentaudit’s function. This research enriches the mechanism theory of the relationshipbetween audit opinion, corporate characteristics and the trade credit financing.Thisresearch enriches the mechanism theory of the audit opinion on the impact of tradecredit financing,It has the important theoretical and practical significance inimproving the quality of audit opinion, promoting the reform of governmenteconomic system.