Auditor Reputation,Quality Of Information Disclosure And Costs Of Debt Financing

This article takes the Small and Medium Enterprise Board companies listed on Shenzhen Stock Market A-share as the research object,and selects 2011-2016 financial data as the research sample.Then based on the analyzation of the relationship between auditor reputation and debt financing cost,we introduce the quality of information disclosure as an intermediary variable to test the relationship among the auditor reputation,the quality of information disclosure,and the cost of debt financing,as well as the analysis of its internal transmission mechanism.During the study,we also introduced the profitability of the company,growth ability of the company,the degree of ownership concentration,the nature of the ultimate controller,company size and other factors that affect the debt financing cost of Small and Medium Enterprise Board companies,as the control of possible variables.After the research,it shows that: Auditor's reputation has a negative effect on the cost of debt financing.That is,choosing an auditor with high reputation for annual auditing of company can significantly reduce the debt financing cost that lags by one year,indicating that auditors are playing an important role under the transition time of Chinese economy and financial institutions has focused on the impact of the auditor's reputation in the credit market during their credit decision-making.An empirical analysis of the reputation of auditors and the quality of information disclosure found that the higher the reputation of the auditors employed by the annual audit,the better information disclosure quality the companies have,and these two variables have a significant positive correlation.The quality of information disclosure has a significant negative impact on debt financing costs and the correlation is also significant,indicating that SMEs with financing needs can obtain lower debt costs by improving their quality of information disclosure.The study finds that there is a conductionrelationship between the reputation of auditors,the quality of information disclosure and the cost of debt financing.The quality of information disclosure plays a partial intermediary effect in the relationship between auditor reputation and debt financing costs of Small and Medium Enterprise Board companies.That is,the negative impact between the auditor's reputation the cost of debt financing is partly passed on by impact of the quality of information disclosure,which indicating that the auditors have played its due role of supervision and promotion of capital market.Through theoretical and empirical research,this paper proposes that SMEs with financing needs reduce debt financing costs by improving the quality of corporate information disclosure.At the same time,CPAs that provide annual audit services are the best third parties to ease the differences in information status between internal managers and external investors.Auditors with high reputation play a significant role in enhancing the overall information disclosure level of enterprises.SMEs can also use the method of hiring high reputation auditors to promote the improvement of corporate information disclosure quality,eases information asymmetry,and moral hazard and adverse selection which caused by information asymmetry,and then reduces the risk premium required by external creditors,thereby effectively reducing debt financing costs.