Effect Of Earnings Management And Credit Rating Of Corporate Bonds Financing Cost

In eighteen Third Plenary Session "CPC Central Committee on Some Major Issues Concerning Comprehensively Deepening the Reform" clearly mentioned the need to improve the financial market system, expanding the extent of the domestic financial sector abroad open. With economic development, more and more diverse ways of financing. Debt financing as an important means of financing in the market economy has gradually occupy an increasingly important position. For the financiers, the cost of financing is an important factor to consider when financing. A credit rating is an important reference to measure risk factors, there are companies related to hidden information. From Schipper 1989 first proposed the concept of earnings management since the earnings management has been one of the topics of academic attention. A large number of domestic and foreign literature shows that earnings management is widespread. Evidence also shows that while a large number of listed companies in China exist earnings management behavior in the capital market and debt contracts. This article will focus on the earnings management, the impact of the credit ratings and corporate bond financing costs between earnings management to explore the behavior of investors can identify good business, and be able to choose a more reliable credit rating criteria. For the above problems, it will use a combination of theoretical and empirical approach to in-depth study.First, at home and abroad about the credit rating, earnings management and debt financing costs related literature to summarize and summarize Secondly, combining principal-agent theory, contract theory and asymmetric information theory explains the credit rating, the bond between earnings management and financing costs related. Thereafter, based on previous theoretical analysis hypothesis, this article will use more than 700 listed companies in Shanghai and Shenzhen for three consecutive years of data for the study of samples for the establishment of the model and assumptions, using data analysis software SPSS17.0 descriptive analysis, correlation analysis and multiple regression analysis.Through empirical analysis, regression results are accrued earnings management and debt financing costs showed a significant negative correlation. This proves that in the course of corporate bond financing of accrued earnings management behavior to reduce the cost of financing is effective, but thus increasing the risk of default, so that the investment risk outside investors increased. The total real earnings management and debt financing costs showed a significant negative correlation, which proves that the process of financing by the issuance of corporate bond financing through the real earnings management behavior to affect the level of financing costs, but also improve the breach thus risks of. Third, whether it is debt or credit rating and issuer credit rating of corporate bonds financing cost radiate a significant negative correlation. Therefore, this paper concluded that the rating agencies have the ability to identify corporate earnings management behavior can thus be well suppressed corporate earnings management, to the market and investors an objective rating as an important reference for investment. Finally, also put forward opinions and suggestions from relevant policy, market as well as the legal aspects of these three.