Auditor Reputation,Political Relevance And Debt Cost

Private enterprises play an important role in China's economic development in the process of rapid development.However,the financing constraints of private enterprises have become an important obstacle to the development of private enterprises.Debt financing is the main external financing way of private enterprises.There are many factors that influence the debt financing.The influence of informal institution and reputation substitution mechanism on private enterprises has been widely discussed by scholars.This paper mainly studies the impact of the reputation of auditors on the cost of debt,At the same time,under the special institutional background of our country,the moderating effect of political connections on the auditor's reputation.This paper empirically examines the relationship between auditor reputation and debt cost in China's Shanghai stock exchange and Shenzhen stock exchange two A private listed companies from 2014 to 2010,At the same time,the paper examines the influence of political connections on auditor reputation.The study found:additional conditions,auditor reputation and political connections with the company were negatively related to the cost of debt,the auditor's reputation,political association of private listed companies to reduce the cost of debt has a significant effect,Further study found that with the gradual establishment of the political relevance of the company,the impact of the reputation of auditors on the company's debt costs will gradually weaken,and political connections have an effect on the reputation of Auditors.Research shows that in our country,the informal mechanism can alleviate the financial constraints of private enterprises,and political connections can gain the trust of investors,but informal mechanism weakens significantly on auditor reputation.The results of this study provide evidence for the existence of informal substitution relationship in China's capital market,The research of the domestic and foreign scholars on the political connection and the auditor reputation mechanism.In order to grasp the deeper in the critical period of economic transformation in China,the system is not perfect,the private listed companies will choose what kind of strategy,try to find a way to reduce the difficulty of financing for private enterprises,Furthermore,it provides theoretical and empirical support for the research of corporate governance of private listed companies in china.At the same time,this study can provide some help for the supervision of the capital market,and to some extent,it can help the government to formulate the policy of resource allocation.