Research About The Influence Of Earnings Quality On Credit Resources Allocation Efficiency

From the enterprises in our country, the present foreign financing structure is that debt financing is still the enterprises’ main channel to solve the shortage of funds, so debt financing efficiency determines the overall efficiency of social capital allocation. So far, however, most scholars focus the research of capital allocation efficiency on the stock market, but they neglect the situation in credit market. The writer of this article attributes the reason of the situation to two related aspects. At first, social capital is configured to each enterprise under the action the credit markets. Second, the enterprise will invest the credit resources to different projects. Credit resources allocation efficiency depends on whether these two capital allocation is efficient. And earnings quality is the key to link the two related aspects together. Because, the high quality of the surplus can guide credit allocation of resources. This means that the companies who have a good benefit can obtain plenty of credit funds to achieve fair and efficient capital allocation link. At the same time, earnings quality can also guide enterprises reduce ineffective investment, improve the service efficiency of the enterprises’ credit funds and promote the funds be used scientifically and efficiently. This is also why, in this paper, we study the earnings quality and credit resources allocation efficiency.This article starts from the theory analysis and it is based on the mechanism of action and the empirical analysis. Firstly, the research defines the concepts of earnings quality and credit resources allocation efficiency, then clears how to measure the two variables. Secondly, this paper uses the information asymmetry theory, signal transmission theory and principal-agent theory to analyze the mechanism about how the earnings quality influences the credit resources allocation efficiency, and summarizes as the following two aspects: on the one hand, high quality surplus information can reduce the information asymmetry and improve the validity of the credit decisions; on the other hand, it can strengthen to the constraints of the enterprise and improve the service efficiency of funds. In empirical analysis, this article selects 772 companies in 2010-2014 financial data, and all these companies are listed in the Shanghai and Shenzhen Stock Exchange, using residual in the extended Jones model which considers the cash flow effects to measure earnings quality, using the year end balance of long-term loans and the current year’s increased long-term loans respectively to measure the efficiency of capital allocation and using the regression residual absolute values to measure the efficiency of funds which are in using stage. The empirical test is divided into two phases: the goal of phase one is to investigate whether the Banks can identify the companies’ earnings quality and guide the credit resources allocation with earnings quality; the goal of phase two is to examine whether the enterprises can reflect the investment efficiency through the earnings quality after they get the credit resources and reduce the inefficient investment behavior. The result of phase one shows that: at present, the listed companies with the earnings of high quality is not necessarily able to obtain more bank loans for a long time, it may be that the Banks in the credit process considers other factors besides of earnings quality, or the bank cannot effectively identify the quality of earnings. The result of phase 2 shows that companies with higher earnings quality can use the credit resources more efficiently, to some extent, the surplus quality can be used to inhibit excessive investment, alleviate inadequate investment and reduce the inefficiency of investment. In this paper, the research results show that the current phase of the effective ways to improve the efficiency of credit resources allocation should be around capital configuration link and strengthen the capital’s guiding function of earnings quality.The innovation of this article is to analyze the credit resources allocation from two different links: the capital configuration link and the use link. Through the surplus quality in the sectors of two nodes, this article studies the capital allocation efficiency with a new research perspective and research framework.