A Study On The Impact Of Accounting Conservatism On Debt Financing Cost

Accounting conservatism refers to the prudent attitude of an enterprise in handling accounting transactions or matters.The provision of accounting conservatism information not only helps to alleviate the agency's own agency conflicts,but also help reduce the investment risk of external investors and creditors.Debt financing is an important channel for listed companies to raise funds.Effectively reducing the cost of debt financing is an urgent problem that listed companies need to solve.The provision of accounting conservatism makes the creditor more clear about the financial and operational situation of the listed company,which is conducive to reducing the cost of debt financing of listed companies.This paper attempts to study the impact of accounting conservatism on debt financing costs.This paper uses the empirical analysis method basing on the financial data from 2013 to 2015 that comes from A shares board and small board listed companies.On the basis of studying the whole sample,the data is classified according to the property right and the listed sector,to discuss the influence of accounting conservatism on the cost of debt financing.The paper first uses the accrual method of cash flow model to verify the existence of accounting conservatism of listed Companies in A stock market,then uses accounting conservatism as explanatory variables and the cost of debt financing as explanatory variables to establish the multiple regression model.It is found that accounting conservatism exists in listed companies from A shares in China,and the accounting conservatism of non-state-owned listed companies is stronger than that of state-owned listed companies,and the accounting conservatism of small and medium-sized boards is better than that of the main ones.The higher the accounting conservatism of listed companies in China is,the lower the cost of debt financing is.The impact of the accounting conservatism of the state-owned listed companies on the cost of debt financing is less than that of the non-state-owned listed companies.The same impact of the listed companies on small and medium-sized boards is less than that of the main ones.According to the empirical conclusions,the paper puts forward relevant suggestions for listed companies,creditors and regulatory authorities.