Research On The Correlation Between Auditor’s Reputation And Debt Financing Cost

As a cell of the national economy,the enterprise contributes to the development and progress of society,and also depends on the economic and financial resources and environment provided by society.From the perspective of financing sources,debt financing is still the main channel for companies to obtain external financing.As an external supervision mechanism,the external audit service can relieve information asymmetry inside and outside the enterprise and play an important role in the process of debt financing by the company.This paper uses the listed companies in A-share market from 2014 to 2016 as a sample to study the relationship between auditor reputation and corporate debt financing cost.The main contributions are: First,on the selection of agent variables for the auditor’s reputation,the comprehensive score of the comprehensive rankings of the firms published in the official website of the China Association of Certified Public Accountants is used as the proxy variable of the auditor’s reputation.Second,on the relationship between the company’s own reputation and the auditor’s reputation,this paper divides the company into well-known and ordinary enterprises,and compares and studies how the company’s own reputation plays a role in the impact of the auditor’s reputation on the debt cost of the company.The study found that the auditor’s reputation can help companies reduce the cost of debt;as the company’s own reputation continues to build,the space for the auditor’s reputation to play a role is gradually reduced;the impact of the auditor’s reputation on corporate debt costs is more prominent in non-state-owned enterprises.