Internal Control,External Audit Quality And Debt Financing Costs

At present,although most listed companies in China have a preference for equity financing,as an important external financing method in China,debt financing,its cost is an important financial decision indicator for listed companies.The level of debt costs affects the development of enterprises to a certain extent.If the cost of debt is too high,enterprises will face greater debt pressure and affect the healthy operation of the capital chain.Therefore,it is especially important to explore ways to reduce the cost of debt.The effective operation of internal control can improve the management level and operational efficiency of the enterprise,reduce the operational risk,and help to timely correct the misreporting and misreporting of the management,ensure the authenticity of the accounting information,and improve the quality of accounting information.However,different enterprises pay different attention to internal control,and the actual implementation of internal control is quite different.Some enterprises with high concentration of equity may have a situation in which the governance layer is above the internal control.At this time,internal control is likely to be ineffective,so the internal governance of internal control is limited.As an external independent governance institution,the auditor relies on neutrality and professional competence to constrain opportunistic behavior,prevent fraud,inhibit earnings management,mitigate agency crises,and improve information transparency.Most scholars in the existing literature use the internal control or external audit quality as independent variables to explore the impact on the cost of debt financing.When exploring the economic consequences of both internal control and external audit quality,scholars mainly use earnings management.The capital occupation of large shareholders is the research object,and the debt financing cost is rarely studied.Moreover,it is concluded that the complementary relationship or the substitution relationship between the two plays a unified role.This leaves a broad study for this paper space.This paper takes the 2013-2017 A-share listed company data as the research sample,uses the Dibo internal control index and other financial data,takes the debt financing cost as the research object,and uses the internal control and external audit quality as explanatory variables,not only studying their debts separately.The impact of financing costs,and by establishing interaction terms to find out whether the two are complementary or alternative when they function.Finally,the following conclusions are drawn:First,the higher the quality of internal control,the lower the cost of debt financing;secondly,the higher the quality of external audit,the lower the cost of debt financing;finally,when reducing the cost of debt financing,the two are substitutes.