The Impact Of Accounting Comparability On Enterprises’ Equity And Debt Cost

High quality accounting information can truly reflect the situation of the enterprise, which can reduce the information asymmetry, improve confidence of the external user, thereby reducing the cost of capital. The accounting information is organized in accordance with requirements of the accounting standards and accounting system. The project disclosured has a unity, so it’seasy for external users to compare. Comparison occurred between different companies, so the company accounting information must be collected with comparability.this can reduce the external users’ information processing cost. However, some items in the accounting standards such as assets, the extraction of bad debt reserve some selection in the processing method, which makes the enterprise choose different methods according to their own consideration. However, some enterprises select the improper selection of treatment methods in order to increase profits, avoid losses. This makes the accounting information with low comparability, affecting the external user’s judgment and a higher capital cost.This paper uses annual data during the period of 2010-2012 in China A shares of listing Corporation to examine how the accounting information comparability make effect on a firm’s cost of equity capital and debt capital cost, and compares the effect differences of comparability on equity and debt capital cost. Through empirical analysis, we draw the conclusion as following: (1) Accounting comparability is significantly negative correlated with the cost of equity, debt capital cost. (2) The higher the accounting reliability is, the weaker impact of accounting comparability on the cost of capital strong is. (3) The accounting comparability affects more on the capital cost of equity than debt.At last, through the empirical analysis we made some conclusions and put forward some suggestions. We hope that regulators can intensify efforts to standardize information disclosure system of listed companies, management can enhance the consciousness of improving accounting comparability, investors and creditors can more effectively use accounting information to make the right decisions,keep the capital allocated rationally.