| In the process of development and growth, enterprises will inevitably encounter a variety of capital constraints. When internal funds can not cover the daily operations and investment needs, they need external financing to provide sufficient funds. Although China’s capital market grows rapidly and brings a broader platform for direct financing since1992, enterprises still tend to choose liabilities financing, a kind of indirect financing. Moreover, China’s bond market is under developed, bank loans becomes the main channel of financing. According to statistics, during1993-2008, enterprises issued stocks in China (A/B) raised$2.2796trillion is equivalent to8.04%of bank loans raised28.349trillion RMB, similar to bond financing raised2.2247trillion RMB.The reform on marketization of interest rates has been carried out for years. Financial institutions can determine loan interest rate based on the benchmark interest rate announced by the central bank independently, which means that banks have self-determination on the interest rate. In this circumstance, banks, as the money supplier will attach more importance on the authenticity and reliability of information. However, in reality, the result of information asymmetry phenomenon is hard to avoid and the loan officers’knowledge structure has its own limitations. It is difficult to ensure that all information can be effectively screened. As a result, banks have to hold a more cautious attitude, by improving the examination standard, raising the cost of loans and so on to reduce the risk of their own, which undoubtedly makes it’s more difficult and expensive for enterprises to get loans.However, debt financing, especially the bank loan is the main financing channel for our enterprises. Enterprise face such a severe situation, in order to get more loans with lower debt cost, they must adopt corresponding measures to guarantee their information reliable and objective. But how can this goal be achieved? Do banks can trust the authority of measures taken by the enterprises? As we all know, the loan covenants is an important mechanism for protecting the interests of creditors. For being ready to take measures to keep abreast of the actual situation of their own interests, creditors need to get real, reliable information, so they need an independent third party to provide effective supervision. What’s more, to achieve sustained and stable cooperation, the creditor will produce high-quality independent audit needs to fit the requirements of the creditors:while in the proof of the legitimacy and effectiveness of funds, reduce cost of bank loans in the future. Undoubtedly, banks and enterprises urgently need an independent third party to seek the best synergy effect. Independent audit will be the bridge between enterprises and banks. It shall be carried out "verification" and "supervision" in accordance with the generally accepted principles of accounting, issuing the appropriate audit opinion, asserting and stating the enterprise accounting information. On the one hand, independent audit can improve the reliability of accounting information, on the other hand, based on specialization and scale of the third party effect it can reduce the cost of enterprises and banks.Therefore, this article studies audit opinion’s influence on the bank loan decisions based on the analysis of the domestic and foreign scholars’related researches, and examine the different loan costs between enterprise with standard audit opinions and non-standard audit opinions. In addition, the audit opinions’ impact on bank lending decisions may varies due to different environmental conditions, and existing studies found that banks’accounting information quality requirements to different property enterprise are different. With the considerations above, this paper is to study the relationship between audit opinion and loan cost, based on property theory, contract theory and information asymmetry theory, from the perspective of borrowing costs,and to further analyze the relationship between independent audit and bank debt contract, to find whether it alters with different property rights, and then discusses the role or managerial effect that independent audit played in bank debt contract with the background of different enterprises the nature of property.This article is consists of six chapters.The first chapter, introductions:This chapter first introduces the research background, then puts forward the research aims and states the theory significance and practice significance of this paper, following the research ideas, research methods and the basic framework of the paper. The second chapter, literature review:This chapter analyzes the previous researches on audit opinion VS bank loan covenants and enterprise the nature of property VS bank loan covenants. It shows that using experimental research method comes up with different conclusions on whether audit opinion is effective in loan-decisions. There isn’t too much literature adopting questionnaire survey method, while the conclusions obtained by using file-research affirm the audit opinions’influence on the bank debt covenants. In addition, I find that the enterprise the nature of property indeed cause different influence on accounting information played in bank loan covenants.The third chapter, theoretical basis and research hypothesis:On the basis of property theory, contract theory and the asymmetric information theory, this chapter studies the relationship among enterprise the nature of property, the audit opinions and bank lending decisions, and then puts forward the hypotheses of this article:(1) Hypothesis1:Enterprises with non-standard audit opinions have a higher bank loan costs compared to those with standard audit opinions in the same condition.(2) Hypothesis2:State-owned enterprises have a lower bank loan costs compared with non-state-owned enterprises. That is audit opinions have limited influence on state-owned enterprises’loan cost compared with non-state-owned enterprises’The fourth chapter, the research design:This chapter begins with the selection of standard sample and data sources, and sets the research model with reference to relevant researches. This paper selects non-financial companies of2006-2010Shenzhen and Shanghai-listed on A shares as the initial sample; the cost of bank loans as dependent variable; audit opinion for the previous year, the nature of the enterprise the nature of property, and the interaction term between corporate the nature of property nature and audit opinion for the previous year as independent variable; in addition, this paper draws on Kim (2007), Li Haiyan (2008) and FanWenxuan(2012)’s study, selects the following indicators:the scale of the enterprises, the scale of the debt, the term and structure of the loan, ROA, current ratio, revenue growth, total asset turnover, equity multiplier as the control variables.The fifth chapter, the empirical test:This chapter starts with descriptive statistics of the study variables, and then does t-test to audit opinion for the previous year and enterprise property, uses correlation analysis and multiple regression method to test whether the hypotheses is consistent with the regression results and makes reasonable explanation. At last, it tests the stability of the model.Chapter6, conclusions and recommendations:This chapter summarizes the research and main innovations, proposes relevant policy recommendations, and points out the limitations of this study as well as the directions of future research.The research method:the article adopts the method of combining normative analysis and empirical analysis. After relevant theoretical analysis of the internal relations between audit opinions, the cost of bank loans and the property, it selects five-year’s data of non-financial enterprises listed on A-share market, to conduct empirical research, build models, and validate the assumptions, and then draws the conclusions.The conclusions:1. Enterprises with non-standard audit opinions have a higher bank loan costs compared to those with standard audit opinions in the same condition. It means that the non-standard audit opinion in the loan market has significant information content.2. The interaction term between corporate property nature and audit opinion for the previous year is negative and significant at the5%level restrictions, indicating non-standard audit opinion has less impact on the cost of state-owned enterprises. State-owned enterprises have a lower bank loan costs compared with non-state-owned enterprises. That is audit opinions have limited influence on state-owned enterprises’ loan cost compared with non-state-owned enterprises’.The contributions are as following:1. Adding the interaction term between corporate property rights nature and audit opinion for the previous year to audit opinions’ influence on loan cost, to see how property right works in the pricing of audit opinions’ influence on loan cost. The interaction term between corporate property rights nature and audit opinion for the previous year is negative and significant at the5%level restrictions, indicating non-standard audit opinions’ impact on the cost of state-owned enterprises is weakened.2. This paper enriches the literature of audit opinion decision’s usefulness, especially the considerations of different enterprise property rights; it enriches the research of loan covenant.3. The main users of audit opinions should actively take measures to make the audit opinion more useful. For audit firms, they need to strengthen the system construction, improve the professional competency of certified public accountants, strengthen the firm’s quality control, and explain the effect and limitations of audit opinions to the user’s and make efforts to improve the understandability of the audit information. As the main creditor, banks should make full use of the signal conveyed by the audit opinion, improve the "power" and "ability" to use audit opinion and then improve the effectiveness of credit decisions. To reduce unnecessary losses, loan relevant stuffs should be well-trained. Government should reduce intervention to the activities of bank credit moderately, give banks more independent credit decision-making power, to further advance the process of the banking market-oriented reform, to create a competitive market environment, thus makes the bank a self-financing entity. Meanwhile, independent audit will play a more positive role in the credit markets.The limitations:1. Due to the limitations t of data acquisition, this paper uses finance charges as a rough estimate of the amount of interest expense, dependent variable is defined as the financial costs/(short-term loans+long-term loans). In fact, corporate finance charges contains a lot, such as:interest expense, interest income. The sample size is not enough. Therefore, this variable of the bank loan cost still has limitations, which may affect the final conclusions of the paper.2. The sample is selected from the non-financial enterprises listed on Shenzhen and Shanghai A-shares stock market from2006to2010CSMAR database. Since it sets the selecting range previously as listed company, in the selected sample there is large part of state-owned enterprises, this may affect the conclusions of the research on the nature of enterprise property rights. Because of the limited data acquisition, it is hard to go further study and I hope that the follow-up studies to further validate the conclusions.3. This paper does not classify the enterprise into different industries. Future research may classify the enterprise into individual groups. |
