Research On The Relationship Among Internal Control Deficiencies,Accounting Conservatism And Debt Contracts

Financing activities are the starting point for enterprises to carry out production and business activities,Equity financing and debt financing are the two major financing methods for enterprises.Creditors provide funds to enterprises,and shareholders use creditors' funds to conduct production and business activities,When the capital proceeds are good,the shareholders get huge benefits,and the creditors get fixed principal and interest;when the project investment fails and the funds do not return,the creditors may not be able to withdraw principal and interest.Therefore,there is asymmetry between the income and risk of shareholders and creditors in the company.Therefore,it is very important to explore how creditors protect their own interests.And it is very important to explore how creditors make decisions based on corporate information.Accounting conservatism is one of requirements of accounting information quality,Its basic idea is to confirm the loss in time and carefully recognize the gain.Robust accounting information reflects the company's real assets and liabilities and various stakeholders attach great importance to this.Internal control is a management mechanism within the company,effective internal control has a positive impact on the company's operating efficiency,asset safety,financial reporting,and investor interests.When creditors provide loans to enterprises,they need to conduct risk assessments based on the information disclosed by the companies,and then decide on the level,duration,and scale of interest rates for the loans.When the company's accounting policies are cautious,the risk assessment of the creditor is beneficial,it will win the trust of the creditor and finally obtain the ideal loan conditions.When its internal control is deficiencies,it will send a dangerous signal to the creditor,reminding the creditor to pay attention to certain situations of the company.This paper considers the debt contract based on the loan size and loan maturity structure,I will explore the relationship between accounting stability and loan size,the relationship between accounting and loan maturity structure,and then discover their mechanisms in order to provide better ways for corporate financing.Based on the analysis of principal-agent theory,information-asymmetry theory,signal transmission theory,and incomplete contract theory,I conscientiously sort out relevant documents such as accounting conservatism and debt contract,and theoretically analyze the impact of accounting stability on loan size and debt maturity,and then propose the hypotheses.Construct a logical model of accounting conservatism,loan size,and loan maturity,and identify whether there are internal control deficiencies or not and divide the sample into groups for comparison in order to distinguish the impact of internal control deficiencies on the main relationship.I use A-share data of Shanghai and Shenzhen stocks in 2014-2016 as a sample,use SPSS21.0,EXCEL2013 and other software to filter the data,descriptive statistics,correlation analysis,and regression analysis of the model,and draw the following conclusions:(1)After controlling the related variables,accounting conservatism has a positive impact on the scale of borrowing;(2)After controlling the relevant variables,accounting conservatism has a positive impact on the proportion of short-term borrowings;(3)When the internal control of the company is flawed,The positive influence of accounting conservatism on the scale of borrowings and short-term borrowings will be weakened.