Research Of The Financial Irregularities On Debt Contracts:Evidence From Listing Corporation In China

Financial irregularities of listed companies are malignant tumors in the capital market.Not only the legitimate rights and interests of small and medium investors are eroded,but also the normal order of the market is destroyed,and a series of economic consequences caused by this are shared by all market participants.According to the statistics of China Association of Interbank Market Dealers,external funds of listed companies in China mainly come from bank loans and other debt channels at present.Compared with creditors under the modern corporate governance mechanism of shareholders have the risk transfer and motivation,but if the listed company financial irregularities,were punished regulatory announcements for the creditors is one of the stakeholders will adjust debt contract,according to the penalty may be higher request to the listed company’s debt capital cost and shorten the debt maturity.Based on the initial sample data of China’s A-share listed companies from 2012 to 2020 and under the theoretical framework of information asymmetry theory and signal transmission theory,this paper studies the relationship between financial irregularities and debt contracts and the impact of accounting information quality on the relationship through empirical analysis.In the empirical research,firstly,the relationship between financial irregularities and debt contracts is studied.The results show that financial irregularities increase the debt capital cost and shorten the debt maturity structure of listed companies.Second,according to the regional average violation rate of grouping research,it is found that when the regional average violation rate is higher than the mean,the financial violation of listed companies in the region has a more significant impact on the debt contract.Thirdly,according to the average violation rate of the industry,it is found that when the violation rate of the industry is higher than the average,the financial violation of listed companies in the industry has a more significant impact on the debt contract.Finally,the possible reasons for the above phenomenon are explained in the summary of regression analysis.In the further analysis,the relationship between financial irregularities,accounting information quality and debt contract is deeply studied.It is found that the quality of accounting information can not significantly adjust the relationship between financial irregularities and debt contracts,that is,after considering the impact of financial irregularities,the quality of accounting information becomes less useful to creditors’ decision-making.No matter the quality of accounting information is high or low,creditors will not significantly adjust the debt capital cost and debt maturity of listed companies with financial violations or more violations.In addition,the possible reasons are explained in the summary of further analysis.This paper puts forward suggestions from three aspects.First,creditors should give full play to their own advantages to reduce default risks and give appropriate financing preferences based on specific analysis of different enterprises.Second,regulators should "adapt measures to local conditions" to implement regulatory measures and strengthen the crackdown and punishment of financial irregularities.Third,accounting and information disclosure of listed companies should follow the system to avoid financial violations.At the same time,it is necessary to understand the creditors’ attention to the region and industry factors of financial violations and pay attention to negotiation strategies.