Analyst Concern,Product Market Competition And The Cost Of Debt Financing

When internal funds cannot meet their own needs for operation and development,enterprises will obtain funds through external financing,and the level of financing costs will have a vital impact on the development of enterprises.External financing of enterprises mainly include equity financing and debt financing,because our country enterprise equity financing has more and stricter constraints,with debt financing has less and relaxed constraints,and with financial leverage and the tax shield effect,and the absence of dilution of control rights,thus be favored by the enterprise,make it in the external financing way of enterprises occupy the important position.According to the National enterprise burden survey and evaluation report released by China SME Cooperation Association in 2018,shows that 64%of enterprises in China expect to reduce debt financing costs and expand financing channels.Reducing the financing cost of enterprises is an important way to implement the "supply side" reform policy in China,while reducing the debt financing cost is the most important.Analysts are one of the important rational forces representing effective pricing in the capital market,analysts can effectively act as information intermediaries and improve the pricing efficiency of the capital market.Analysts use their own professional knowledge and advantageous channels to provide more information to creditors and other external investors,who are in information weakness,which greatly increases the breadth and depth of creditors' cognition,effectively alleviates the problem of information asymmetry between enterprises and creditors,and reduces the cost of debt financing.At the same time,due to the different competition environment of product market,the external competition pressure faced by enterprises is also different.The fierce competition of product market makes enterprises suffer from the huge pressure that may be eliminated by the market.It increases the business risk and financial risk of enterprises,also brings corresponding credit risk to creditors,thus,creditors will rely more on the information that conveyed by analysts to make credit decisions,which increases the influence of analysts.When tracking,issuing earnings forecasts and investment recommendations,it is necessary for analysts to understand the pro duct market competition environment of target enterprises.Therefore,this paper is intended to explore the relationship between analysts' concern and debt financing costs and the regulatory role of product market competition.Taking A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2013 to 2017 as research samples,this paper explores the relationship between analysts' concern and debt financing cost,and the moderating effect of product market competition on the relationship between them.At the same time,in recent years,internal control is one of the hot topics in academic,regulatory and practical circles,in this paper,internal control,analysts' concern and debt financing cost are included in the same research framework in further research,expect to explore how enterprises' initiative to strengthen internal control will affect the relationship between analysts' concerns and debt financing costs.The specific content of this paper includes the following six parts.The first part is introduction.This paper expounds the research background,research significance,research ideas and methods,as well as innovative points.The second part is literature review.This paper combs,refines and summarizes the relevant literature at home and abroad,analyses the current situation of research on this topic at home and abroad,and points out the direction of this research through literature review.The third part,theoretical analysis and research hypothesis.As the theoretical support of this study,it defines the relevant concepts and basic theories.Then,based on the theoretical basis,it makes a theoretical analysis of the relationship between the analysts' concern and the cost of debt financing,explores the conjunction between phenomena and theory,and puts forward the research hypothesis on this basis.The fourth part,research and design.On the basis of theoretical analysis and research hypothesis,research samples are selected and data sources are defined.Variable definitions and design models are selected to lay the foundation for empirical analysis.The fifth part is empirical analysis.By descriptive statistical analysis,correlation analysis and empirical test analysis of the selected sample characteristics,this paper discusses the relationship between analysts' concern and debt financing cost,examines the impact of product market competition on the relationship between analysts' concern and debt financing cost,further explores the impact of internal control on analysts' concern to reduce debt financing cost,and on this basis carries out robustness.The sixth part,conclusions and countermeasures.Through empirical research,it draws conclusions,and puts forward countermeasures and suggestions to achieve the purpose of this paper.Finally,it summarizes the possible shortcomings of this paper.This paper finds that the analysts' concern can reduce the cost of debt financing,that is,the more analysts track,the lower the cost of debt financing;the smaller the deviation of analysts' forecast,the higher the quality of analysts' concern,that is,the lower the cost of debt financing.According to the grouping test of product market competition,it is found that the fierce product market competition significantly strengthens the negative correlation between the number of analysts' tracking and the debt financing cost,and also significantly strengthens the positive correlation between the analysts' prediction deviation and the debt financing cost.In the further study,the empirical research found that when the enterprise's internal control is better,the negative correlation between the amount of analyst tracking and the debt financing cost is more significant.When the enterprise's internal control is better,the positive correlation between analysts' deviation and debt financing cost is more significant.Based on the special institutional background of our country,this paper mainly discusses the impact of analysts' concern on the cost of debt financing.The possible innovations are as follows:(1)The research perspective is novel and unique.Based on the research perspective of analysts' concern,this paper explores its impact on debt financing cost,and tests whether product market competition will affect the relationship between analysts' concern and debt financing cost,the research perspective is novel and unique,which provides a new perspective and thinking for analysts' concern on the relationship between debt financing cost and debt financing cost.(2)The content of this article has a certain degree of innovation.For the first time,this paper incorporates analysts' concern,product market competition and debt financing costs into the same research framework,and further tests the impact of internal control on analysts' concern about reducing debt financing costs.The research content of this paper deepens the research on the impact of analysts' concern on the cost of debt financing under the special institutional background of China and provides incremental evidence for it.