Research On The Impact Of Corporate Fraud On The Cost Of Trade Credit

Financing is the foundation of enterprise development and motivation,while financing constraints and financing channels are common problems encountered by enterprises in China.It has long plagued the healthy development of China's real economy and affected the efficiency of financial operations and corporate value.Commercial credit is an example of an enterprise obtaining short-term financing to ease financing constraints.The use of commercial credit is not the business motivation,but also the finance motivation.More and more enterprises attaching importance to the establishment of commercial credit relationships in order to obtain lower cost commercial credit.However,current corporate violations occur frequently,corporate reputation and interests has damaged,which also damaged the credit environment of the capital market seriously.Creditors and other financial institutions usually consider the profitability and risk status comprehensively in the credit decision process.Therefore,after receiving information about the company's violation penalties,creditors will make up for the increase in the cost of debt,that is,the interest on loans.The risk of information asymmetry and the risk of loan recovery are used as compensation for its benefits.This risk compensation behavior is an active and normal self-protection behavior under the condition of capital marketization.Then,the commercial credit is another important financing tool for an enterprise,when a company violates the rules,how do suppliers avoid risks,whether the conclusion of relevant commercial credit contracts and the terms are affected,and whether the cost of commercial credit will increase? Based on this,this article attempts to explore the impact of corporate violations on business credit costs from the perspective of corporate violations,using a combination of normative research and empirical research,and analyzes the relationship between the effectiveness of internal control and the level of rule of law.The performance difference between the two companies will help companies strengthen corporate governance,reach business credit contracts at the most favorable cost,and get more business credit.This paper consists of the following parts.The first chapter is the introduction,which mainly explains the research background and significance.Taking the economic consequencesof enterprise violation and the in-fluences of commercial credit financing cost as the axis,summarizing relevant literatures at home and abroad for review.Furthermore,introduce the research methods and ideas,discusse the innovation and significance of the research.The second chapter is the concept definition and relevant theories.First of all,we define the concepts of enterprise violation and commercial credit cost.Then explain the theoretical basis of this article's analysis and research.The third chapter is the description of the current situation,theoretical analysis and research hypothesis.Based on the theoretical analysis,the research hypothesis about the mechanism of corporate violations on commercial credit costs of this paper is proposed.The fourth chapter is the empirical part,which specifically discusses the establishment of the model,the selection of sample data,and defines the main variables.Descriptive statistics and regression analysis are used to empirically test the data to confirm the research hypothesis,and the conclusion is stable through robustness test.The last part is the research conclusion and policy suggestion.The study finds that:(1)there is a significant positive correlation between enterprise violation and commercial credit cost.(2)the effectiveness of internal control significantly weakens the positive correlation.(3)the legal environment inhibits the rise of commercial credit financing cost caused by enterprise violation.The main contributions of this paper are as follows :(1)this paper studies the influences of commercial credit financing cost from the perspective of enterprise violation,and enriches the research literature on the economic consequences of enterprise violation and the influencing factors of commercial credit financing cost.(2)In transitional period,many studies did not consider the company's internal control effectiveness and the legal environment,the paper comprehensive consideration of the above two,in order to get low cost commercial credit,alleviate the financing difficult problem and promote the reform of corporate governance.