Internal Control Quality And Debt Financing

Between2001and2002, many corporations like Enron and WorldCom exposed a series of financial fraud, shocking the world capital market and undermining investors’ confidence seriously in the capital market. For this purpose, United States Congress passed the Sarbanes-Oxley Act in July2002, the quality of the internal control of public companies and these disclosure guidelines have been stipulated strictly; Our country also have issued a series of laws and regulations in order to improve the quality of their companies’ internal control, strengthen the supervision and restriction of the debtor, solve the problem of information asymmetry between the debtors and creditors and obtain debt financing at the same time with achieving the purpose of providing reasonable protection to creditors. Therefore, the quality of enterprise’s internal control has a significant impact to promote the ability of debt financing. The relationship between internal control’s quality and debt financing has become an important subject in the research of current accounting.This article adopts the way of combining theoretical analysis and empirical research, using the information disclosure of public companies in our country as samples to discuss the quality of public company’s internal control on the impact of debt financing in our country. Combing the related literature of the quality of internal control on the impact of debt financing, and using the information asymmetry theory, signaling theory, debt maturity structure theory and agency cost theory as the foundation, to build the theory framework of the article and put forward the research hypothesis of this article. When the company has a high quality of internal control, the cost of debt financing will become lower and the capacity of accessing to the new loan and the new business credit also will become stronger relatively. The high quality can improve the company’s debt maturity structure and increase the ability of obtaining debt financing; When the quality of the company’s internal control is poor, the financial report may have a great defect, creditors don’t understand of the debtor’s real operating and financial conditions fully, in order to ensure their own interests can not be compromised, creditors will demand for a higher cost of debt to make up the defects brought by the information asymmetry.To be specific, this thesis is divided into six parts for research discussion.The first part is the introduction. The research background, research significance, research methods and research contents of this article had been elaborated mainly, the article research train of thought and the overall framework had also been analyzed briefly, and put forward the innovations and shortcomings of this articleThe second part is the literature review. This article inducts and summarizes overseas, domestic research status of the internal quality control on cost, debt maturity structure of debt financing, new loans and business credit related research achievements the thesis, providing a solid theoretical foundation of the further research.The third part is the theory analysis and the research hypothesis. The article combed the predecessors’understanding and the understanding of relevant concepts, defined the concept of internal control’s quality, debt financing and maturity structure of debt, and put forward the research hypothesis on the basis of the information asymmetry theory, signaling theory, debt maturity theory and agency cost theory in this thesis, providing theoretical support for the subsequent empirical research.The fourth part is the research design. First of all, delimiting the conceptual of the selecting model variables and the introduction of the company’s size, asset-liability ratio, total assets return rate, the multiple of interest safeguard, industry and control people attribute index as the control variable; Secondly, building the multivariate linear regression analysis model. Last, explaining the sources and ensuring the following result of empirical analysis authentic, reliably and stringency.The fifth part is the empirical analysis and countermeasures. This part is the key part of the article, empirical analyzes the impact of the internal control of public companies in our country on the quality of debt financing.First of all, analyzing the model regression results of the fourth part comprehensive and inducting the empirical research conclusions; Secondly, in order to ensure the research hypothesis,using a variety of ways to stability test; Last, to test the result forward, our article select the top100public enterprises of the better internal control index of2011’s sampled data, in order to ensure the relationship of the internal control quality and debt financing.The sixth part is the research conclusion and revelation. Through theoretical analysis and empirical research, I obtained the following conclusions:(1)The high quality of the internal control can improve the ability of company’s new loans, the ability of new commercial credit, and improve the company’s debt financing ability;(2)The high quality of internal control can effectively reduce the company’s debt financing cost;(3)The high quality of internal control can significantly improve the company’s debt maturity structure and improve the short-term debt ratio. At last, in allusion to the existing problems found in the research, take example by domestic and foreign research, put forward the countermeasures and suggestions.