| Financing constraints have a great influence on companies’investment and development issues. It also affects the allocation of resources in capital market. As a result, financing constraints will eventually have an impact on the healthy operation of the national economy. What’s more, the imperfection of Chinese capital market causes the company who has a financing demand to face a even more difficult situation. Therefore, to explore the effective mechanism of relieving financing constraints becomes a work full of necessity.The existence of asymmetric information, agency costs as well as transaction costs brings about financing constraints. Furthermore, as an effective mechanism of corporate governance, auditing can reduce the degree of asymmetric information and agency costs. Following this logic, it seems that auditing can effectively relieve the financing constraints a company faces. Moreover, different ownership structures may cause different financing constraints model. Consequently, it is necessary to distinguish state-owned and non-state-owned enterprise when we try to find the relationship between auditor’s quality and companies’financing constraints. Meanwhile, as a special service in capital market, the influence of auditing on financing constraints is largely depend on the development of capital market. But everyone knows that in different regions of China, economic development is unbalanced. So grouping developed regions and developing regions when we explore the relationship between auditor’s quality and financing constraints also makes sense.This paper, using auditor’s reputation big10 and industry expertise as proxy of high-quality auditor, employing the cash-cash flow sensitivity model brought forward by Almeida, Campello and Weisbach using in 2004, adopting the data of listed companies between 2007 and 2010, explores the effect of auditor’s quality on companies’financing constraints. In addition, by distinguishing the ownership of different enterprises and quality of financial ecological environment of different areas, the paper further researches how auditor’s quality affects corporation’s financial ability. The regression results can be summarized as follows:(1) In general, the empirical result shows that high-quality auditor, proxied by both auditor’s reputation and industry expertise, can effectively relieve companies’ financing constraints.(2) After making a distinction between state-owned companies and non-state-owned companies, we find that, auditor’s reputation big 10 can not ease all companies’financing constraints, but only works for state-owned companies. That is to say, when a state-owned company hires a big 10 auditor, it’s financial constraints level significantly reduced. On the other hand, accounting firm’s industry expertise can lighten all companies’financing constraints, without any differences between state-owned companies and non-state-owned companies. (3) Dividing different regions by financial ecological environment,we find that, in developed cities, hiring a big 10 auditor or an industry expertise auditor can significantly ease the financing constraints. Yet in those less developed cities, high-quality auditor can not play a part on relieving companies’ financial constraints. That is to say, high-quality auditor plays a role in easing financing constraints only in areas with excellent financial ecological environment.The contributions of this paper are as follows. From a theoretical point of view, this paper will further enrich related literatures about the influence of auditing on corporate investment and financing behavior. At the same time, this study will provide a new perspective for people who want to explore the basic problem "who needs high quality auditing". From a practical perspective, the conclusion of this paper shows that perfect capital market is helpful to improve the role auditing plays in the resource allocation process. Consequently, government should take effective measures to improve the capital market. |
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