Abstract
Using a sample of non-financial A-share listed companies in Shenzhen and Shanghai stock exchange between 2008 and 2010, this paper empirically analyzes the influence of corporate governance and independent audit on the cost of debt. The research found that both high-level of corporate governance and high-quality audit supervision can significantly reduce the cost of debt. And there exists a substitution effect between corporate governance and independent audit in affecting debt costs, that is to say, improve the level of corporate governance to reduce the cost of debt only established when audit quality is low, and does not hold in high audit quality. The research show that improves the level of corporate governance and audit quality is of great significance in solving financing difficulties for the enterprise.
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