Research on the Relationship between Assets Impairment and Debt Financing Costs
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DOI: 10.23977/etss.2018.12528
Author(s)
Xixi Zhang, Yuan Su
Corresponding Author
Xixi Zhang
ABSTRACT
Financing is an important business decision for an enterprise, while debt financing costs is a key indicator for corporate financing decisions. The paper uses a sample of the manufacturing companies spanning the period 2012-2016 to study whether the company's assets impairment will affect the cost of debt financing. The more the company's assets impairment losses, the higher debt financing costs, and the more asset depreciation reserves the company can reverse, the higher the debt financing costs. Further research shows that the impact of assets impairment on the cost of debt financing will continue to the second year.
KEYWORDS
Assets impairment, Debt financing costs, Timeliness