A Study on the Relationship between Earnings Quality and Capital Cost-Takes the China Listed Companies as a Sample
Chih-Yi Hsiao
*
School of Accounting and Finance, Xiamen University Tan Kah Kee College, Zhangzhou 363105, China.
Hui-Hui Kuang
School of Accounting and Finance, Xiamen University Tan Kah Kee College, Zhangzhou 363105, China.
Hui-Ling Li
School of Accounting and Finance, Xiamen University Tan Kah Kee College, Zhangzhou 363105, China.
Jia-Li Liu
School of Accounting and Finance, Xiamen University Tan Kah Kee College, Zhangzhou 363105, China.
*Author to whom correspondence should be addressed.
Abstract
The phenomenon of false financial statements still exists. However, in addition to the risk of being punished, what kind of price do companies have to pay? In recent decades, with China's rapid progress in economic, the relevant accounting system and corporate governance standards are actively improving, and the earnings quality is improving. This paper takes China's listed companies from 2015 to 2019 as samples, and adopts quantile regression supplemented by ordinary least square method to explore the relationship between earnings quality and capital cost. The research findings show that the higher the earnings management, the higher the capital cost, especially for the company with low capital cost. Nevertheless, for the extremely company with high capital cost, earnings management can reduce the capital cost. The research results can provide the focus of regulators of listed companies and reference for the revision of relevant accounting system.
Keywords: Earnings quality, capital cost, quantile regression