Research On The Impact Of Audit Quality And Stock Market Mispricing On Financing Decisions

Financing activities are an important part of the business process of the company,and are the source of funds for the company’s business investment,which can ensure that it conducts economic activities normally in the ongoing operation.The way companies choose to finance is affected by the size of the investment project and the state of the capital market.In a fully efficient market,all information is reflected in the value of the stock.The company cannot obtain excess returns through financing decisions,and can only rely on business activities to enhance corporate value..In an incompletely efficient market,because of the information asymmetry in the capital market,investors can not obtain all the information related to the business activities of the enterprise.Then managers with information advantages can manipulate the financial statements of whitewash enterprises through earnings to influence the stock prices in the capital market.Drawing on the financing timing theory,the market’s mispricing of corporate stocks may lead to corporate financing timing behavior.This paper argues that the mis-assessment of corporate stocks is due to the earnings manipulation of the management with private information.When the financing of enterprises is higher than the cost of financial risk caused by debt financing when the financing of enterprises is higher than that of debt financing,managers Will give up the equity financing channel.As an independent third-party regulatory agency,social auditing plays a role in information transmission and reducing information asymmetry.Higher audit quality means that the probability of misstatement of corporate financial disclosure is smaller,and the probability that the stock price will be wrongly stocked may be lower.This indicates that audit quality may affect the mispricing of corporate stocks and affect the financing of enterprises decision making.This paper establishes a theoretical model that proves that corporate financing decisions are related to stock prices and audit quality.Based on this paper,this paper chooses the corporate financing method as the research object,and analyzes the impact of audit quality and stock mispricing on corporate financing choices.According to the selected financial data of listed companies from 2013 to 2017,the empirical tests were carried out under the factors of controlling the scale of assets,cash size,profitability,growth and equity.The results show that the quality of the audit will affect the degree of market miscalculation of the stocks of the company.When the audit quality is low,the managers successfully carry out the earnings manipulation,which makes the investors blindly overestimate the enterprise value,and the enterprises prefer the equity financing.