Research On The Impact Of Debt Financing On Accounting Conservatism Of Listed Companies

Conservatism is also known as prudence. When confirming and measuring economic matters, conservatism requires enterprises remaining cautious attitude. Enterprises can’t overstate assets and interests, underestimate liabilities and expenses. Both International Accounting Standards and China’s enterprise accounting principle regard accounting conservatism as extremely important quality characteristics of accounting information. The accounting information is the main information source of stakeholders’decision-making need. The conservative accounting information undoubtedly plays an irreplaceable role in reducing the company’s business risk and protecting the interest of investors and creditors. Thus, researching accounting information conservatism is significant.With the development of modern corporation system, the separation of ownership and management rights lead to the agency problem of enterprises. As a result, corporate governance emerges. We regard corporate governance as an institutional arrangement which relieves the agency costs. Corporate governance mechanisms are divided into interior and exterior mechanisms, the accounting information is the product of the process of corporate governance, so the accounting information conservatism will be influenced by corporate governance factors. At present, scholars mainly have studied the effects of internal governance factors such as board characteristics, ownership structure on accounting conservatism. Few scholars study the effect on the accounting conservatism from the perspective of debt financing.This paper select the Shanghai and Shenzhen Stock Exchange-listed A shares of companies as samples from 2010 to 2012 in China, test the effect of debt ratio and debt maturities on accounting conservatism. This study showed that:Firstly, the accounting conservatism generally exists; Secondly, the existence of debt will affect the conservatism of the accounting, the higher the debt ratio, the more robust of enterprise accounting information; Thirdly, according to the time limit, The debt financing is classified as short-term debt financing and long-term debt financing, accounting conservatism is positively associated with short-term debt financing, but not significantly related with the long-term debt financing. Finally, based on China’s capital market imperfections and unique institutional background, according to the nature of ownership, the listed corporation is divided into state-owned listed corporation and non state-owned listed corporation. In the state-owned listed corporation, accounting conservatism is positively associated with short-term debt financing, but not significantly related with the long-term debt financing; In the non state-owned listed corporation, accounting conservatism is positively associated with short-term debt financing and long-term debt financing.