Analyst Following,Audit Quality And Financing Constrains

At present,in the environment of rapid development of the Internet of Things and diversified services,the world industry is welcoming a new industrial revolution.All countries in the world are actively transforming the production methods of traditional manufacturing industries and upgrading their industrial forms.In this environment,the Chinese economy has ushered in a period full of opportunities,and it also ushered in the test period of the 40 th anniversary of reform and opening up.The slowdown in economic growth has promoted the direct transformation and upgrading of China’s economy.The core link of transformation and upgrading is that the innovation vitality of Chinese enterprises is fully released to generate new economic growth models.Improving the production efficiency and resource allocation efficiency of economic factors is a problem that the Chinese economy needs to face and solve after reaching the peak of the demographic dividend.In the process of economic growth,from the input of production factors to the drive of knowledge innovation,the transfer of social resources,especially the transfer of capital elements is particularly important.When the role of resource allocation in the capital market comes into play,the company’s ability to innovate can be truly motivated.Most companies face financing constraints during the transformation and upgrading process.If a company wants to survive or has good development prospects,it must solve the financing problem.Through a comprehensive analysis of previous studies,it is found that the reason why enterprises generate financing constraints is mainly because of the internal and external information asymmetry and agency problems.Therefore,how to ease the degree of financing constraints of enterprises by reducing the degree of information asymmetry of enterprises and reducing the agency costs between principals and agents is worthy of following.Analyst concerns and audit quality can play an important role in reducing corporate information asymmetry and reducing agency costs.Based on the above background,this paper studies the relationship between analysts’ following,audit quality and financing constraints,and provides some suggestions for enterprises to alleviate financing constraints.First of all,this paper sorts out the relevant literatures of analysts’ following,audit quality and financing constraints,reviews and summarizes the relevant literatures on analysts’ concerns and the impact of audit quality on financing constraints,and then leads to the research of this paper.Since most scholars’ research focuses on the impact of analysts’ following on corporate financing constraints,it has not yet been studied whether the quality of audit will affect the relationship between analysts’ following and financing constraints,which provides an opportunity for the research of this paper.Secondly,this paper analyzes the mechanism of interaction between analysts’ following,audit quality and financing constraints,and discusses the theory of information asymmetry,principal-agent theory,signal transmission theory and efficient market hypothesis.Through relevant theoretical analysis,it is theoretically verified that analysts’ following and audit quality will affect the degree of financing constraints of enterprises,and theoretical analysis is made to further study how audit quality affects the relationship between analysts’ concerns and corporate financing constraints.On this basis,the three basic assumptions of this paper are proposed.Thirdly,this paper takes China’s 2007-2016 10-year A-share non-financial and non-ST listed companies as research samples,and controls the year,industry,company size,company growth,asset-liability ratio,equity concentration,and assets.Based on the factors such as type,return on assets,agency cost,etc.,the software of Stata14.0 is used to empirically analyze the relationship between analysts’ following,audit quality and financing constraints.Finally,the following research conclusions are obtained:(1)Analysts’ following will help to reduce the degree of information asymmetry,reduce agency costs,and enhance investor confidence,thereby alleviating financing constraints.But when the degree of marketization is high,this conclusion does not hold.(2)High audit quality can improve the quality of accounting information and reduce the degree of information asymmetry.At the same time,external auditing as a third-party forensic can reduce the agency cost,thus alleviating the degree of financing constraints of enterprises.(3)The high-quality external audit improves the quality of the company’s annual report.The annual report is the main source of information for analysts’ earnings forecast.The high audit quality will reduce the incremental information provided by analysts,so the high audit quality will be weakened.Analysts are concerned about the negative correlation between financing constraints.At the same time,this paper recalculates the degree of financing constraints by recalculating the kz index,re-measures the quality of audits with “whether the top ten accounting firms”,and re-measures the total number of research reports published by a single analyst for each listed company every year.The analyst’s following,after replacing the measurement method,the regression results are still significant.The two-stage method is used to carry out the endogeneity test,and the influence of the analyst’s self-selection behavior on the research conclusion is excluded.The results show that the regression analysis results of the model have certain robustness.Based on the theoretical and empirical analysis of the causes and influencing factors of financing constraints,this paper puts forward relevant suggestions to alleviate the financing constraints of enterprises.The relevant recommendations are as follows: First,we must standardize the development of the analyst industry,enhance the analyst’s professional ethics and professional knowledge,better play its role in the capital market,and improve the efficiency of the entire capital market.Second,we must improve the quality of external audits.The government should strengthen the supervision of accounting firms,accounting firms must improve the level of internal control,enterprises must cooperate with accounting firms to conduct audits,and the three work together to improve the quality of external auditing and ease the financing constraints of enterprises.Third,enterprises must strengthen their internal control system,constrain the individual behavior of management,win the trust of investors,and lay a solid foundation for the long-term development of enterprises.