Institutional Environment, Fair Value And Corporate Debt Financing Costs

The emergence of the financial crisis has led people to begin to doubt the use of fair value in reality.But it is undeniable that the convergence of accounting standards characterized by fair value is an inevitable trend to international convergence.The practice from China's capital market has been proved that the introduction of fair value,increase the relevance of accounting information,thereby improving the efficiency of capital market allocation of resources.With the further development of China's financial innovation and enterprise investment practice,enterprises are increasingly using fair value in accounting confirmation and measurement.So,about the issue of debt financing which the enterprise is more concerned,we'd better explore the pros and cons of the use of fair value.With the increasing use of fair value in the financial statements,whether it will have some impact on corporate debt financing costs?How does fair value measurement affect debt financing costs?Furthermore,our country is in the process of transition economy,will the relationship between fair value and debt financing costs be affected by the institutional environment?Based on this,this paper uses empirical research to explore the above issues,with a view to provide some basic recommendation for business management in our enterprises.The paper is divided into six parts,the main arrangements are as follows:For the start,this paper elaborates the research backdrop,research target and research significance,expounds the research methods and main contents of this paper,and puts forward the innovation of the research.And then after a large number of literature on the subject of domestic and foreign research results to sort out,and based on the analysis of debt contract theory,information asymmetry theory and principal-agent theory,we choose the data of Shenzhen and shanghai A-share listed companies from 2011 to 2015 as the research sample,construct the panel data model to validate the change of the cost of corporate debt financing after the introduction of fair value measurement mode.In addition,combined with the special institutional environment in China,we select three aspects of the institutional environment,respectively considering the differences in property rights,differences in the level of financial market development and the differences in the degree of competition in the product market on the impact of the study hypothesis.The study finds that,(1)There is a significant negative correlation between the change of fair value and the corporate debt financing costs,the higher the proportion of profit and loss of fair value changes to total profit,the lower the cost of debt financing.In other words,the positive change in fair value can significantly reduce the corporate debt financing costs.(2)The effect of fair value on the corporate debt financing cost is inseparable from the influence of institutional environment.Institutional environment is different,the impact of fair value on debt financing costs are also different.Among them,compared with state-owned enterprises,the impact of fair value on debt financing costs is more pronounced in non-state enterprises;Compared with the underdeveloped financial markets,the impact of fair value on debt financing costs is more pronounced in developed areas of financial markets;Compared with the low level of competition in the product market,the impact of fair value on the cost of debt financing is more significant in the industry with higher competition in the product market.Finally,according to the conclusion of this paper,the corresponding policy suggestions are put forward from the disclosure of fair value accounting information,the improvement of valuation technology and the optimization of macroeconomic environment of fair value application in order to improve the fair value in the accounting practice,provide more reliable and relevant accounting information to banks as bondholders,thereby facilitating the successful conclusion and execution of debt contracts.The research of this paper provides empirical evidence for the analysis of the value and application of fair value accounting information in bank credit decision.It proves that the introduction of fair value in the convergence of accounting standards is in line with the objective development of capital market in China.At the same time,the research of this paper shows that the enterprise makes full use of the decision-making usefulness and the usefulness of the debt contract in the process of applying the fair value,which is inseparable from the guarantee of the institutional environment.This will inspire China to continuously optimize the external system environment,for the fair use of the fair value to create a high degree of openness,full competition in the market environment,so that it will fully play the role of information transmission,and fully demonstrated the superiority.