Audit Quality, The Nature Of Property Right And Debt Financing Cost

The establishment and perfection of Chinese certified public accountants audit system, is under the government vigorously promote, from the early salustro zhongrui to the scale of the recent merger, all without exception shows the important role of the government and industry association. With the progress of market-oriented reform in our country, the importance of certified public accountants audit quality is becoming more and more, and it’s in the investment and financing system of society plays an important role in the value of information verification, this not only affect the enterprise financing affect the capital allocation efficiency of the whole society. Auditing profession development need to audit quality as the guarantee for a long time, but because our country certified public accountants industry started relatively late, objectively exists the phenomenon of firm’s audit quality the good and bad are intermingled, capital market growing financial fraud is the performance of audit quality is not high. As certified public accountants audit the signal value, as reflected in the enterprise sustained development objective need high quality of certified public accountants audit the right signals, and the role especially in enterprise financing activity is most important. Current in the financing of listed companies in China mainly through two ways, namely, equity financing and debt financing. Relative to equity financing, debt financing has its own advantages, especially enterprise need short-term liquidity, the convenience is obvious, and it may get tax on financial creditor’s rights financing advantages, thus creditor’s rights financing is still the important way to obtain funds of listed companies. Existing related studies have shown that the audit quality will be in the debt financing of listed companies play a role.Banks and other financial institutions in lending decisions depend on the audit of certified public accountants verification results. Because of listed companies in our country state-owned listed companies and the difference of non-state-owned listed companies, have been affected by government intervention in the financial market in China, when the financial institutions in lending decisions take into account the government guarantee, tend to be more inclined to state-owned listed companies, which makes the non-state-owned listed companies exist in the creditor’s rights financing financing disadvantage. The size of the companies involved in the creditor’s rights financing debt, period, and the cost of capital. This articlefrom the perspective of debt financing costs, combined with China’s financial environment and system background, analysis of audit quality in state-owned and non-state-owned listed companies will affect the cost of debt financing, and what effect.This article will be from 2011 to 2013 a-share listed companies as samples, empirically the audit quality of state-owned and non-state-owned listed companies’ debt financing costs.Research conclusion of this paper is as follows: first, in the case of other factors constant, the higher the quality of the audit, the lower the cost of debt financing. It shows that the quality of audit has economic value, can have the effect of reducing the cost of debt financing of listed companies. Second, the state-owned enterprises in terms of debt financing has the congenital advantage, their debt financing costs are usually very low. It can be seen that the current situation of our country, state-owned enterprises will get extra care of government, financial institutions are more willing to lend to them and to provide a lower cost of debt capital. Third,in non-state enterprises, a high quality audit to lower cost of debt financing effect more apparent. The results have a lot to do with China’s current financial environment.Non-state-owned enterprises compared with state-owned enterprises, the difficulty of getting loans from Banks and other financial institutions are relatively large, in the case of information asymmetry, non-state-owned enterprises are more likely to be based on the statements of whitewash for loans. Considering whether to the non-state enterprises financial institutions, such as bank loans in order to reduce the risk of their own will be more trust by the high quality of certified public accountants audit of financial statements. This to the non-state pointed out the direction of the listed companies, even if they don’t have extra care of the government, they can still by hiring high quality firm provides the high quality of audit to achieve this purpose.Contribution of this article is the research on the cost of debt financing play a role of audit quality on the basis of the nature of property rights were taken into account, can better explain the status quo of debt financing in our country.