An Empirical Research On The Influence Of Financial Restatement On Debt Financing Of Listed Companies

Financial restatement is a hot issue in academic research,Many largemultinational corporations,including Enron and WorldCom in the United States,have undergone financial restatement.Afterwards came along the scandal of false accounting information,which aroused the attention of all countries to the financial restatement.The proportion of listed companies with financial restatement in China has remained high.It seriously interferes with the users’ understanding of the content of accounting information,it also affects the investment decision of investors,exacerbates the problem of information asymmetry,and results in serious economic consequences.Debt financing is an important financing method for listed companies,and the level of debt financing cost and debt maturity structure are indispensable to the future development of listed companies.Regular disclosure of financial reports by listed companies is the main source for creditors to obtain corporate financial information,evaluate the financial situation of the company and its ability to develop in the future.The financial restatement behavior indicates that the financial information previously disclosed by the listed company is fake and there are errors which will seriously affect the confidence of the creditors in the listed company.Relatively,There are few studies on the economic consequences of financial restatement,few scholars directly study the influences of financial restatement on debt financing cost and debt maturity structure.This essay collects the listed companies that have issued the financial restatement announcement on the main board of the Shanghai stock market and the main board of the Shenzhen Stock Exchange,using the "Accounting Error Correction" as the key words through CNINF as the research sample.By matching a sample company for each financial restatement company based on certain criteria,combing the relevant research literature at home and abroad,and analyzing the informationasymmetry theory,principal-agent theory,signaling theory,risk assessment theory,it carried on the substantial evidence analysis.Lessons are drawn from the research of existing scholars in the concrete empirical research.The cost of debt financing is measured by the sum of interest charges,fees and other financial costs to the average total liability.In addition,debt maturity structure is measured by the ratio of non-current liabilities to total liabilities.Considering the lag of financial restatement behavior,this paper puts off one year in dealing with the cost of debt financing and the maturity structure of debt financing.The company size,asset-liability ratio,net interest rate on assets,cash recovery rate of total assets,fixed asset ratio and the nature of ultimate controller were selected as control variables,years and industries are controlled taking into account the impact of the industry and macroeconomic situation.Research findings:(1)There is a significant positive correlation between financial restatement and debt financing cost.That is,compared to a non-restatement company,the restatement of the company’s debt financing costs is higher.Considering the increased risks,banks and other creditors would raise the financing costs of the restatement company.(2)There is no negative correlation between financial restatement and debt maturity structure.On one hand,probably in the long term,debt is affected by debt contracts.In the short term,creditors such as banks are unable to reduce the long-term debt of the listed companies;On the other hand,long term debt may be more dependent on the nature of the final controller,that is the external implementation mechanism of "government relations".So the debt maturity structure does not change clearly,but it will protect its own rights by raising the cost of short-term debt financing.(3)This paper also finds that,whether it is the cost of debt financing or the debt maturity structure,the nature of the final controller has a significant impact on both.When the final control is a state-owned listed company,the cost of debt financing is lower and the debt maturity structure is longer.It is confirmed that the state-owned listed companies have more financing advantages.Combined with the results of empirical analysis,the conclusion of this paper is that the financial restatement will affect the debt financing of the listed companies,although the debt maturity structure has not been reduced in the short term,the cost of debt financing will rise significantly.This study enriches the research content of the financial restatement and provides an empirical data.The listed companies should pay attention to the adverse effects of the financial restatement on their own financing,strengthen corporate governance,improve the quality of financial reports,and prevent financial restatement risks.The government and the regulatory authorities should pay attention to this phenomenon,improve the relevant laws and regulations,improve the system of financial restatement,and guide the healthy and orderly development of the capital market.