Does Market-based Reform of Lending Rates Improve Corporate Ac-counting Robustness?
Based on the quasi-natural experiment of China's interest rate marketization reform,we examine the changes in the signaling function of accounting information and the path of influence after the deregulation of the capital factor market.The study finds that the level of corporate accounting robustness increased significantly after the liberal-ization of the lending rate cap in 2004 and the lending rate floor in 2013.Moreover,after the liberalization of the lend-ing rate cap in 2004,private firms increased their accounting robustness more significantly based on the incentive to ob-tain bank loans;after the liberalization of the lending rate floor in 2013,SOEs increased their accounting robustness more significantly based on the motive of reducing financing costs.Heterogeneity analyses show that the impact of the liberalization of the upper and lower limits of the lending rate on both private and state-owned firms is more pronounced when firms are higher in growth and lower in diversification.Research based on economic effects shows that after the liberalization of the lending rate cap in 2004,private firms increased their level of accounting soundness and received more short-term bank loans;and after the lower limit of lending rate was liberalized in 2013,the level of accounting ro-bustness of state-owned enterprises increased and the cost of bank loans was significantly reduced.The study confirms the interplay between interest rate policy,accounting information and corporate behavior,enriching the understanding of the economic effects of China's interest rate marketization reform.
financial market reformmarketization of lending ratesaccounting robustnessbank lending
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