Management Ability, Auditor Changes And Debt Financing Costs

Debt financing is one of the most important financing methods for companies,and it is also a hot issue in the study of financial theory.The initial research on the influencing factors of debt financing mainly focused on corporate governance,information disclosure,accounting conservatism,and company characteristics.However,with the continuous deepening of research,the research on corporate debt financing theory has begun to shift to behavioral financial theory,that is,to study the influence of human factors on debt financing.As the actual manager of a company and the decision-maker of a financing act,the manager's individual ability differs greatly due to differences in age,education,tenure,experience,etc.Therefore,it also has different effects in debt financing activities.The audit plays a supervisory role between the company and the creditor.Therefore,the auditor's change behavior involving the cooperative relationship between the company and the auditor will also receive great attention from the creditor.Therefore,it is of great significance to study the influence of management capabilities,auditor changes,and the combination of the two on debt financing costs.After a clear research background and research significance,this article reviews the domestic and foreign literature on management capabilities,auditor changes,and debt financing costs,and proposes the assumptions of this paper on the basis of principal-agent theory and debt contract theory.Then,using the data of the A-share listed companies in Shanghai and Shenzhen stock markets from 2009 to 2016 as a sample,an empirical analysis was conducted on the relationship between management capabilities,auditor changes,and debt financing costs.The process of empirical analysis mainly consists of three parts: Firstly,it uses data envelopment analysis(DEA)and Tobit regression to measure the capabilities of management,and examines the relationship between management capabilities and debt financing costs.Second,the auditor changes are set as dummy variables,and their impact on the cost of debt financing is analyzed.Finally,it examines the impact of the combined effects of management capabilities and auditor changes on the cost of debt financing.This paper finds the following three conclusions through the study:(1)Thehigher the management ability,the lower the debt financing cost.(2)Enterprises with auditor changes have higher debt financing costs.(3)High-level management capabilities can significantly reduce the adverse impact of auditor changes on debt financing costs.In the end,the research in this paper shows that in order to reduce the cost of debt financing,companies can take the following measures:(1)Strengthen the capacity of managers and strive to create the maximum output for the company with the minimum investment;(2)Maintain a stable auditor-client relationship and improve the quality of financial reports.