Study On The Relationship Between Environmental Uncertainty,Accounting Conservatism And Debt Financing Cost

In recent years,securities regulatory authorities have continuously strengthened the control of equity financing of enterprises,therefore more and more enterprises seek financial help through debt financing.However,due to the continuous increase of credit risks,enterprises are also facing greater debt financing pressure.With the development of economy and the continuous innovation of science and technology,enterprises are facing with more uncertain factors and operating risks are also gradually increasing.Companies will pay higher debt financing costs because of the increased environmental uncertainty.Some studies have proved that accounting conservatism can enable creditors to obtain high-quality accounting information and reduce information asymmetry.In terms of debt financing,sound accounting policies increase the likelihood that companies will fall foul of debt covenants.Therefore,when the environmental uncertainty of enterprises is increasing,the impact of accounting conservatism on debt financing is becoming more and more important.The existence of accounting conservatism plays an important role in obtaining debt financing for enterprises,which is worth further discussion.This paper analyzes the relationship between environmental uncertainty,accounting conservatism and the cost of debt financing based on the viewpoints of scholars from various countries.Taking the data of A-share companies in China from 2014 to 2018 as the research sample,the data analysis software STATA15.0 was used to analyze the research sample and test the proposed hypothesis.The following conclusions are obtained: First,environmental uncertainty is positively correlated with the cost of debt financing.Second,accounting conservatism is negatively correlated with debt financing cost.Third,accounting conservatism weakens the positive impact of environmental uncertainty on debt financing cost.Fourth,the accounting conservatism of non-state-owned companies weakens the positive impact of environmental uncertainty on debt financing costs more significantly than that of state-owned companies.The high level of environmental uncertainty may lead to the intensification of operational risks.Strengthening the ability to cope with uncertainty has a positive effect on the reduction of debt financing costs of companies.Good accounting conservatism delivers high-quality financial information to creditors and reduces their credit risk.Therefore,it is suggested that enterprises should continuously improve their accounting conservatism to cope with the negative impact of environmental uncertainty,break the expensive situation of financing,and get better development.