Shared Auditors,importance Of Relationship And Debt Financing Cost

Since the implementation of supply-side structural reform,cost reduction has achieved remarkable success.However,the high cost of debt financing is still an important factor which restricting enterprises to become bigger and stronger.Existing studies show that the quality of enterprise information disclosure is an important factor affecting the financing cost of enterprises.High accounting information transparency can help creditors better evaluate the default risk of enterprises,so as to reduce the risk premium and reduce the debt financing cost of enterprises.Creditors have some difficulties in obtaining information of supply chain companies,and shared auditors may solve this problem by improving accounting information transparency of audit clients,and thus reducing the debt financing cost of enterprises.When the auditor audit suppliers and customers at the same time,the auditor can obtain information from both suppliers and customers at the same time,the information that is not fully disclosed in the financial report and the potential fraud and errors in the financial report are more likely to be found by the auditor,by requiring the enterprise to fully disclose and correct the errors,the quantity and quality of information disclosure in the financial reports are improved,thus the level of accounting information transparency is improved,which alleviates the information asymmetry between the company and the creditor,finally the enterprise's debt financing cost is reduced.Therefore,this study will first explore whether the shared auditor of supplier and client can reduce the debt financing cost of listed companies by improving its accounting information transparency and also how the importance of relationship between suppliers and clients can affect the above relationship.This study selects 682 listed companies from 2007 to 2016 to examine the relationship between shared auditors and debt financing costs.Results show that shared auditors between suppliers and clients can reduce the debt financing cost of the audit clients,and this effect depends on individual shared auditor.In addition to the above results,this study also explores the mechanism about how can shared auditors reduce debt financing cost,results show that the increased importance of the relationship between suppliers and clients enables the shared auditor to reduce the cost of debt financing to a greater extent.What's more,the shared auditors reduce the debt financing cost of audit clients by improving the accounting information transparency of audit clients.At the same time,the moderator effect of the importance of relationship between suppliers and clients' on shared auditor and debt financing cost depends on the mediating effect of accounting information transparency.This study is meaningful for promoting the shared auditor,helping enterprises to improve the accounting information transparency,and reducing the problem of information asymmetry which is commonly existing in the capital market and the problem of high financing cost.