External Governance Environment, Accounting Information Quality And Financing Constraints

The MM theory holds that the capital market is perfect.Under this state,the investment decision of the company has nothing to do with financing,but only with its investment demand.The internal and external funds of the enterprise can be completely replaced.However,the perfect capital market does not exist.In reality,managers often have more information than investors,and shareholders and creditors need information to obtain information.Therefore,they will demand more return on capital.This will make the company’s cost of financing from the external capital market higher than the use of internal retained costs,resulting in the company is facing financing constraints,affecting its investment.Accounting information as an important way to reflect the company’s financial status and operating results can reduce the information asymmetry between investors and internal managers,thereby reducing the cost of financing.At the same time,under the background of China’s emerging plus transitional system,the external governance environment of the company is unbalanced,which will also affect the microeconomic behavior of the enterprise and affect the financing of the enterprise.What is the impact of high-quality accounting information and corporate external governance on financing?What is the difference between this effect and the nature of different types of property rights? With these issues in mind,this paper conducts in-depth research on the impact of external governance environment and the quality of accounting information on corporate financing constraints.In this paper,through the review of related literature and theoretical research,a series of hypotheses are proposed.Taking China’s Hushen A-share listed company as a sample to conduct an empirical test,using binary Logistic regression to construct a financing constraint index to measure the financing constraints,using the revised Jones model to measure the earnings quality and the C-score model to measure the accounting stability.As a measure of the quality of accounting information,sex uses the market-oriented index to represent the external governance environment of the enterprise,and then constructs a regression model to study the relationship between the three.In addition,the impact of the different nature of the ultimate controlling shareholder on the relationship between the three parties was considered,and thegrouping was conducted in-depth study.And draw the following conclusions: First,improving the quality of earnings and accounting conservatism can ease corporate financing constraints,and this mitigation effect is more pronounced in non-state-owned enterprises.Second,the improvement of the external governance environment can ease financing constraints and play a more significant role in non-state-owned enterprises.Finally,the external governance environment has different performance in adjusting the balance between earnings quality and accounting conservatism in financing constraints,and it shows a strengthening effect on the quality of earnings and an alternative effect on the stability of accounting.After using the KZ index to measure the financial constraints to perform robustness tests,the results are basically unchanged.Finally,this article gives some policy recommendations targeted and extends the direction of future research.