Study On The Relationship Between Auditor Reputation, Audit Quality And Corporate Bank Loan Financing Capacity

Borrowing money from the bank is still an important channel for enterprises to obtain external financing.However, since the financial crisis in 2008, People's Bank of China has tightened the monetary policy, which makes many enterprises have encountered problems of being lack of money. CPA audit as an external governance mechanism may help reduce the degree of the asymmetry of information between the internal and external the company in the process of obtaining loans from banks. In recent years, guided by the "bigger and stronger" strategic policy of Chinese Institute of Certified Public Accountants, there appears some effect of building the auditor reputation in the audit market, auditor reputation mechanism gradually plays a role.Therefore, whether the auditor reputation can affect and how it affects the bank loan financing capacity of enterprises is very important for companies, banks and accounting firms.This paper studies the auditor reputation, audit quality and bank loan financing capacity through both normative and empirical research based on data from 2010 to2013 in Shanghai and Shenzhen A-share listed companies. In the empirical study, the high reputation of auditor is measured by the top four international accounting firms and top ten domestic accounting firms, audit quality is measured by the extent of earnings management and bank loan financing capacity is measured by the proportion of long-term loans to total assets. This paper studies the mediation role of audit quality in the relationship of auditor's reputation and bank loan financing capacity.The empirical results show that the auditors' reputation has begun to play a role,the high reputation of the auditors can help the companies to raise bank loans financing capacity; high reputation auditors can lower the degree of earnings management, and audit quality is higher; audit quality plays an intermediary role between the auditor reputation and financing capacity, which is consistent with the theoretical analysis and research hypothesis. Studies shows that the auditor reputation mechanisms have begun to play a part, it influences the financing capacity by influencing the audit quality and thus improving the efficiency of bank credit resources to promote healthy and sustainable economic development.