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The Impact of Accounting Standards Change on Debt Financing of Enterprises

Author: YanLing
Tutor: ZhangXianZhi
School: Dongbei University of Finance
Course: Financial Management
Keywords: Accounting Standards Change Accounting Information Debt Financing Debt Maturity Structure Debt Financing Cost
CLC: F233
Type: PhD thesis
Year: 2013
Downloads: 24
Quote: 0
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Abstract


Corporate financing behavior is a typical act of agency. The outside investors entrust capital to financing enterprise and management, which is the essence of financing process. The reason why outside investors willing to provide funds is that there is a commitment between borrowers and lenders. The commitment can ensure the interests of outside investors against losses, and the commitment becomes effect when outside investors trust in the enterprise. The emergence and development of trust need a stable investors benefit safeguard mechanism. But when it comes to investor rights and interests protection question, traditional financial theory is more focusing on shareholder’s rights, creditor’s rights guarantee problem has always been neglected by modern corporate finance theory field. The reason is mainly due to the creditor’s rights and benefits under normal circumstances is not linked to enterprise’s actual business performance, only in the circumstance that enterprise is unable to pay debts or other violation of debt contracts happens, the partial transfer of control will trigger from the borrower to the creditor, and the traditional shareholder governance theory has ignored the risk of creditors in the process of financing, thus ignoring the attention to the problems of protection of the rights and interests of creditors. However, the outbreak of the financial crisis in2006makes the debt becomes theoretical problem which have to be pay more attention to. The subprime mortgage crisis which is ignored at the beginning has evolved into a debt tsunami, without any warning to the people in front, and the global economy into recession. At this point, the debt problem has become the world economy keywords, so intertwined with the debt risk of creditors’ rights and interests protection problem appears especially important. New accounting standards implemented accounting concept from Revenue-expense view to balance sheet view. The fundamental change of accounting concept makes the target from the entrusting liability viewpoints to useful viewpoints of policy-making, the change reveals the new accounting standards focus on make accounting information more fairly reflect the enterprise’s economic nature, emphasizes the beneficial to stakeholders in the decision-making. In terms of decision usefulness of accounting information, the arrival of financial crisis makes us truly feel the importance of accounting for social economy. Although the use of fair value is to blame for the outbreak of the financial crisis of the debate is still on, but failing to reflect the objective and effective accounting supervision and banking business outside the property debt table, thus contributing to the outbreak of the financial crisis is an indisputable fact. Therefore, in recent years, the economic consequence of adopting IFRS is one of the hottest research topics. So far as to today, there have been many effects of the implementation of standards is studied, but it’s only5years since new accounting standards’implementation. The economic consequences of adopting IFRS are not comprehensive. Based on this special phenomenon in China, this dissertation investigated the impact of new accounting standard on corporate debt financing of non-financial listed companies after the period of transition to new accounting standard in China.The research has certain theoretical significance and practical significance. From the theoretical value, first of all, for the study of international convergence of accounting standards, western theoretical and empirical studies are based on a developed market economy condition. And China is a country in transition economy period, the state-owned enterprise is widespread and the levels of competition is completely low in the market, whether western research of related conclusion has applicability in our country is a problem worthy to be discussed. Based on the background of China, the dissertation srudis the economic consequences of accounting standards change. Second, this study focuses on the impact of accounting standards change on debt financing of enterprises, from the overall and specific accounting standards for research, break through the existing research, the limitations of accounting standards as a whole was studied. In addition, by analyzing the relationship between accounting standards change and the debt financing of enterprises, build the path of the mechanism between accounting standards and enterprise behavior, pay more attention to the economic consequences of accounting standards on the enterprise behavior (especially debt financing behavior). The purpose of this dissertation is to clarify the impact of accounting standards change on enterprise debt financing behavior, rich theoretical basis of accounting standards change research and basic theory, enrich and perfect the debt financing behavior research theme, strengthening financial management and accounting disciplines.From the point of practical value, first of all, this dissertation has cleared the influence of accounting standards change on enterprise debt financing behavior, gives play to the guiding role of accounting standards for enterprise debt financing behavior. The research conclusions can guide the enterprise’s debt behavior and the enterprise’s financial situation of listed companies and other coordination management behavior, make the listed companies effectively control risk points in the process of financing, reduce the financial risk of the debt financing, and on this basis to find ways to improve enterprise value. Secondly, the research of the impact of accounting standards on corporate financing behavior provide a reference for the impact of accounting standards on other management behavior,and also for other government policy or system implementation in the future.In this dissertation, the change of accounting standards mainly refers to new accounting standards promulgated in2006. Research of this dissertation can be divided into8chapters which proceed as follows:The first chapter is the introduction. This part mainly introduces the content of the article, clear the background of the selected topic, research significance, research objectives and contents, technology roadmap, and research methods.Chapter2reviews extant literature. The review on domestic and foreign relevant research related to the accounting standards change subject, which leads to the new accounting standards. The debt financing specific research situation at home and abroad were reviewed and comb, the dissertation focuses on the impact of accounting standards change on debt financing. And to clarify what scholars are studying in the field, existing problems and the insufficiency, and which is lack of subject research, lead to the topic of this dissertation, determine the research direction of this dissertation.Chapter3analyzes the background of the system and debt financing environment in China, which provides realistic background and theoretical basis for the dissertation.Chapter4is theoretical basis. This part illustrates with agent theory, asymmetric information theory, debt contract theory which is the basic theory of the dissertation.Chapter5is theoretical analysis. First, define the accounting standards change, and clear the characteristics of accounting standards change. Second, put the quality of accounting information as a measure of accounting standards implementation effect. The dissertation uses two different methods (modified Jones model and correction of the DD model) as the measurement of accounting standards change. Starting from the basic principles of accounting standards change, analyze how the change of accounting concept from the revenue-expense view to balance sheet view to ease the degree of information asymmetry between shareholders and creditors, play a role in creditors’ rights and interests protection, thereby lowering debt agency cost in the process of debt financing. On the basis of the analysis of basic principle of the new accounting standards, explain how the accounting standards change impact on debt maturity structure and debt financing cost.Chapter6investigates the influence of new accounting standard on corporate debt maturity structure of non-financial listed companies after the period of transition to new accounting standard in China. Chapter7investigates the influence of new accounting standard on the cost of debt financing of non-financial listed companies after the period of transition to new accounting standard in China.Chapter8will summarize the studies on several levels above, point out the main contributions and shortcomings of this paper, and then point out the future research direction.In this dissertation, research innovation embodied in the following respects. First, put the accounting standards change as a breakthrough point for debt financing research, establish theory of the impact of accounting standards on debt financing. Western research literature about debt financing focus on agency cost, information asymmetry theory, contract theory, debt issuance costs, corporate governance and behavioral finance. Although there are a few literatures document the relationship between accounting information and debt financing, but the combination of accounting standards change, and combining with the specific standards content lack of the study. This dissertation based on accounting standards change as the breakthrough point to study the influence factors of debt financing, build the theory that how accounting standards impact on debt financing of enterprises. Second, analyze the background of the system in China and the debt financing present situation. This dissertation uses multivariate regression, parametric and non-parametric test, descriptive statistics method to test such as the industry category, corporate nature of property rights and the relationship between the cost of debt maturity structure and debt financing; The financing behavior of listed companies in China from the angle of system, explains the financing structure and financing cost. Thirdly, the conclusion of the disseration confirms the role of high quality accounting standards on the process of reducing information asymmetry. For managers, through the correct use of the new accounting standards, improve the quality of accounting information, the managers can improve the management of financial resources, increase the debt maturity. And reduce the uncertainty which caused the risk of default risk premium, then decrease the cost of debt financing. Fourthly, from the outside to the inside, explore how the overall and specific accounting standards change impact on debt financing, and reveal the role on which accounting standards play in the process of corporate governance. Combining with the specific accounting standards change in the study of the economic consequences of accounting standards change, the dissertation focuses on the impact of accounting standards on creditors in the process of enterprise financing decisions. Fourthly, there are a lot of defects exist in the current domestic empirical studis of factors affecting debt, this dissertation on these aspects to be improved. In this dissertation, using the data of non-financial listed companies in China construct multiple regression model, and control the industry category and the influence of the year, In order to verify the impact of accounting standards change on debt financing, this dissertation uses the data of criterion change before and after five years, which make the sample reached during10years. In the robustness test we use two-way fixed effect model. The empirical model presented in robustness test allows us to control for unobservable firm specific effects (unobservable heterogeneity) and firm invariant time-specific effects. At the same time, in order to rule out the measurement of accounting standards change variables to the regression result, the dissertation use two different methods (modified Jones model and correction of the DD model) as the measurement of accounting standards change.

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CLC: > Economic > Economic planning and management > Accounting > Accounting Organization and system
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