The relationship between loan financing with Expenses management and the effect of audit quality

Loan financing is one of the important approaches to obtain resources which can changes the expense behavior through management incentives. In addition, auditing and its quality can protect the bank's benefit using control on opportunistic incentives as a component of corporate governance. The relationship between financing from the banking system with expenses management and the effect of audit quality on is investigated in this research. Long term Loan Financing as a proxy of financing from the banking system and audit firm category as a proxy of audit quality have been used. Expenses management also is measured by the relationship between logarithm of GA&S expense ratio with logarithm of revenue ratio. As a result, 127 firms (762 firm-year) listed on TSE in 2010 to 2015 with considering some characteristic is examined. The regression analysis (FGLS) - pooled method is used to analyze data.
The result reveal Loan Financing motivates companies to reduce their expenses; in other word, expenses behave more symmetric in companies which finance from banks. In addition, audit quality does not affect expense behavior in these companies.