The Impact Study Of Accounting Conservatism On Financing Cost In Chinese Listed Companies

As one of the accounting information quality requirements, accounting conservatism plays a more and more important role in corporate financing activities. Especially under the background of the rapid development of China’s market economy and tendency of the international convergence of accounting standards, investors pay more and more attention to the conservatism of accounting information, because accounting conservatism can effectively alleviate the conflict of interests of the contracting parties, reduce the agency costs and the risk of information asymmetry and eventually achieve the governance mechanisms of investor and creditor protection. Therefore accounting conservatism can reduce the expected rate of return of the investors and creditors, that is to say it will reduce the cost of the equity financing and the debt financing. Existing research on accounting conservatism focused on the judgement of existence of accounting conservatism, mechanism of formation and the economic consequences, while the classification of accounting conservatism has been few researched, further to say, the study combining beforehand(afterwards) conservatism and financing cost is even more rare. In this paper, writer base on contract theoty,agency theory and signaling theory, through researching the influence of beforehand(afterwards)conservatism on debt and equity financing, the paper is aimed to provide a more rigorous empirical basis for enterprises to follow moderate accounting system, and provide a theoretical basis for consolidating the status of accounting conservatism in the new accounting standards.This thesis takes all the non-financial listed companies in the Shanghai and Shenzhen stock markets from 2007 to 2013 as the research sample, and applies both normative research method and empirical research method. First of all, the paper analyzes the relationship between accounting conservatism and financing cast from three aspects:contract theoty,agency theory and signaling theory, and then put forward four research hypotheses in this paper: the higher afterwards conservitism, the lower debt financing cost; the higher beforehand conservitism, the higher debt financing cost; the higher afterwards conservitism, the lower equity financing cost; the higher beforehand conservitism, the higher equity financing cost. Secondly, with the C-score,BTM to measure beforehand(afterwards) conservitism, and two models are established, respectively test the correlation od the accounting conservatism and the financing cost. Finally, the paper draws the following conclusion: Firstly, the higher accounting conservatism can reduce the equity financing cost. Secondly, the afterwards conservatism can reduce the debt financing cost, while the beforehand conservatism may increase the debt financing cost.