Creditor Governance And Accounting Conservatism

Previous studies on the theory of creditor governance have shown that contract is the most critical factor affecting accounting conservatism(Watts,2003).Creditors can participate in corporate governance through debt contract.Among them,the most important way of governance is to supervise the accounting information governance of enterprises and ensure their own governance effect through high-quality accounting information.However,previous studies on the measurement of creditor governance and the quality of accounting information can not eliminate the endogenous problem.On May 27,2017,the SFC promulgated some regulations on shareholders and directors of listed companies to reduce their shareholdings(hereinafter referred to as the "New Regulations on Reduction of Shares"),which are applicable to the equity pledge market and further restrict the amount,time,manner and information disclosure of the reduction.In equity pledge,the interest of the pledgee is limited to obtaining the principal and interest of the loan,which makes the creditor play the role of "creditor" among the stakeholders of the listed company.Obviously,the issuance of the new rules can be regarded as an exogenous experiment of a shock in the field of creditor governance.Under the circumstance of limited stock liquidity,will creditors negotiate with shareholders and listed companies to supervise accounting information in order to stabilize the value of collateral? In this process,do creditors indirectly play a corporate governance role? This paper takes this opportunity to study the relationship between creditor governance and accounting conservatism of listed companies by using natural experimental research methods.Based on the above analysis,this paper uses the data of Shanghai and Shenzhen A-share listed companies in China from 2016 to 2017,takes the companies that issue equity pledge announcements as the object of study,takes accounting conservatism as the measure of creditor governance,studies the impact of creditors on accounting conservatism of listed companies after the reduction of new rules,and verifies debt from two perspectives of market reaction and corporate behavior.The governing function of the authority.The structure of this paper is as follows: Chapter 1: introduction;Chapter 2: literature review;Chapter 3: theoretical analysis;Chapter 4: research design;Chapter 5: empirical analysis;Chapter 6: further research;Chapter 7: robustness test;Chapter 8: research conclusions,enlightenment and prospects.The main conclusions of this paper are as follows: Firstly,the creditors of equity pledge will significantly improve the accounting conservatism of listed companies with equity pledge after the New Regulations on Reduction of Ownership,so as to play a governance role.Secondly,after a thorough study of the role of pledge ratio and the number of creditors in regulating accounting conservatism,it is found that the higher the pledge ratio,the fewer the number of creditors,and the more significant the governance role of creditors in improving accounting conservatism of listed companies after the New Regulations on Reduction of Holdings.Thirdly,from the market reaction after the New Regulations on Reduction of Holdings,there is equity pledge after the implementation of the policy.The risk of stock price collapse is reduced.Fourthly,from the behavior of listed companies after the new rules,the probability of financial restatement of companies with equity pledge is reduced after the implementation of the policy.The above research enlightenment: Firstly,the regulatory authorities should pay attention to the close relationship between corporate governance and capital market,understand the mechanism and path of corporate governance through contractual relationship,and better play the role of creditors’ governance;secondly,through the continuous improvement of policies,creditors should be aware of their important role in corporate governance,and constantly enhance participation of creditors.Ability and consciousness of corporate governance.The main contributions of this paper are as follows: Firstly,the solution of endogenous problems in the field of creditor governance.Secondly,this paper enriches and develops the relevant literature on the differences in the characteristics of creditor governance.Thirdly,it examines the policy effect of the New Regulations on Reduction of Holdings.There are still some deficiencies in this study: Firstly,based on the study of the governance role of creditors during the period of equity pledge,this paper neglects the sustainability of the governance role of creditors after the maturity of equity pledge;secondly,compared with participating in corporate governance,creditors tend to adopt simple ways such as reducing the pledge rate,improving the liquidation line and early warning line.Avoiding default risk will weaken the governance role of creditors and make the conclusions of this study less applicable to the future equity pledge market.Thirdly,due to the release of the New Regulations on Reduction of Holdings in 2017,the sample data is too small,the time observation window is relatively short,and the matching quality of PSM will be higher when the sample size is large.Therefore,this paper needs to further expand the sample data and extend the time window,and make a follow-up study on the timeliness of the creditor’s governance function after the maturity of equity pledge.