Ownership Differences, Auditor Reputation, and Debt Financing： Evidence from China  

作　　者：Xu Qu Yanqing Qu Bin Su 

机构地区：[1]School of Accounting,Southwestern University of Finance and Economics,Chengdu 611130,China [2]Center of Internal Control and Corporate Governance,Southwestern University of Finance and Economics,Chengdu 611130,China

出　　处：《Frontiers of Business Research in China》2012年第3期347-374,共28页中国高等学校学术文摘·工商管理研究（英文版）

摘　　要：This research examines whether ＂the paradox of auditor reputation＂ exists in China＇s private debt market. Two types of hypotheses are developed to explain the ＂paradox＂ in terms of ownership differences. Our findings suggest： （1） by retaining big name auditors, non-state-owned enterprises （non-SOEs） significantly reduce the cost of debt and lower financial constraints; （2） For the non-SOEs, the effect of auditor reputation on the cost of debt and financial constraints declines over time due to the accumulation of these firms＇ own reputation; （3） SOEs are more sensitive to the interest rate of bank loans than their counterparts, implying their stronger bargaining power when negotiating with potential creditors than non-SOEs due to their government connections. However, SOEs＇ government connections weaken the informational role of auditors and firm reputation on signaling debt market; and （4） Corporate governance is taken into consideration by creditors as an important indicator of solvency. Further investigation demonstrates that after controlling for firm size, operating cash flow, profitability and leverage ratio, the possibility of hiring big name auditors by the younger and median-aged group of non-SOEs is considerabls, higher than ＂elder＂ non-SOEs. Moreover, poor-performing SOEs have greater incentives to make use of their government connections in their bargaining for lower debt cost, as compared with their well-performing peers.This research examines whether ＂the paradox of auditor reputation＂ exists in China＇s private debt market. Two types of hypotheses are developed to explain the ＂paradox＂ in terms of ownership differences. Our findings suggest： （1） by retaining big name auditors, non-state-owned enterprises （non-SOEs） significantly reduce the cost of debt and lower financial constraints; （2） For the non-SOEs, the effect of auditor reputation on the cost of debt and financial constraints declines over time due to the accumulation of these firms＇ own reputation; （3） SOEs are more sensitive to the interest rate of bank loans than their counterparts, implying their stronger bargaining power when negotiating with potential creditors than non-SOEs due to their government connections. However, SOEs＇ government connections weaken the informational role of auditors and firm reputation on signaling debt market; and （4） Corporate governance is taken into consideration by creditors as an important indicator of solvency. Further investigation demonstrates that after controlling for firm size, operating cash flow, profitability and leverage ratio, the possibility of hiring big name auditors by the younger and median-aged group of non-SOEs is considerabls, higher than ＂elder＂ non-SOEs. Moreover, poor-performing SOEs have greater incentives to make use of their government connections in their bargaining for lower debt cost, as compared with their well-performing peers.

关 键 词：ownership difference auditor reputation debt financing 

分 类 号：F121.2[经济管理—世界经济] F275