Research On The Impact Of Supply Chain Relationship Transaction On The Cost Of Equity Capital

China is in the emerging and transition market stage,to deal with the limited factor market and high transaction costs,enterprises are more inclined to choose the transaction mode based on the relationship network.Especially in recent years,with the increasing competition environment and the diversification of market demand,vertical integration and other "single-fight" business models gradually declined.Therefore,it is a rational choice for enterprises to establish or join the supply chain which adapts to their own business,and to rely on the "relational transaction" based on the supply chain relationship network,thus a supply chain relationship transaction mode based on long-term strategic cooperation,trust or familiar formed.Under this mode,supply chain member enterprises can concentrate their purchasing and selling activities on a few large suppliers/customers,lock in the partnership through relationship-specific investments,reduce the transaction uncertainty and transaction costs between enterprises,promote resource integration and information sharing,achieve the goal of improving operation efficiency and enterprise performance.However,there is evidence that when enterprises' trading relationship with large suppliers/customers suddenly breaks down,they have to terminate their purchasing/selling business and cash flows such as accounts receivable can not be recovered in time,which may lead to serious debt risk and even bankruptcy crisis;due to the high degree of supply chain relational transaction and unable to give a reasonable explanation,some enterprises were rejected by issuing committee when applying for listing;besides,some listed companies listed the high degree of supply chain relationship transaction as a major risk reminder in the annual report.Thus,the impact of supply chain relationship transaction on enterprises may be a "double-edged sword",which not only determines the business model and business environment of enterprises,but also has multiple effects on the economic consequences of enterprises.Therefore,in-depth analysis of the impact of supply chain relationship transaction on the economic consequences of enterprises and their internal mechanisms,and scientific and rational practice of supply chain relationship transaction,is not only the current business managers widely concerned issue,but also the researching hot spot of domestic and foreign scholars in recent years.The cost of equity capital,as an important basis of enterprise investment and financing decision,performance evaluation and value evaluation,is also the key factor affecting capital flow and resource allocation,and its influencing factors have always been an important issue in the Company's financial field.In view of these,this paper,based on the business practice of Chinese enterprises,on the basis of both domestic and foreign research literatures and relevant theories,using scientific research methods,systematically studied the impact of supply chain relationship transaction on the cost of equity capital and its action path,and further analyzes the heterogeneity relationship between the two when the institutional environment and director network location is different.This paper fully reveals the intrinsic mechanism of how supply chain relationship transaction,which is represented by the concentration of suppliers and customers,affecting the cost of equity capital of enterprises.The results can help enterprise managers promote the management level of supply chain relationship transactions and provide a richer theoretical basis and experience support for market supervisors to effectively supervise and guide the behavior of supply chain relationship transactionsThis paper constructs the logical mainline of "Institutional Environment,Relationship Economic--Supply Chain Relationship Transaction--Relationship Specific Investment--Operational Risk,Information Risk-Cost of Equity Capital",uses a variety of empirical methods to examine the impact of supply chain relationship trading on the cost of equity capital and its internal mechanism.The main objectives of this paper are as follows.Firstly,based on the business practices of Chinese enterprises,this paper analyzed the specific effects of supply chain relationship transactions on the cost of equity capital from the perspective of the whole supply chain;Secondly,the paths of supply chain relationship transactions affecting the cost of equity capital are analyzed and tested;Thirdly,the heterogeneity of the relationship between supply chain relationship transaction and the cost of equity capital is further analyzed under different institutional environment and directors' network position;Fourthly,according to the research conclusion,puts forward the relevant policy recommendations from the perspectives of enterprise managers and market regulators,and points out the research deficienciesBased on the above research,the main conclusions obtained in this paper are:Firstly,supply chain relationship transaction can significantly increase the cost of equity capital,which is manifested by the higher concentration of suppliers/customers,the higher the cost of equity capital.This conclusion shows that,although in theory,supply chain relationship transaction is showing a "double-edged sword" effect.On the one hand,it can play the "synergy"effect of supply chain integration for enterprises to reduce enterprise risk.On the other hand,it can also lead to opportunistic "embezzlement" effect caused by the relations imbalance or even interruption to increase enterprise risk.However,in the practice of Chinese enterprises,the"embezzlement" effect brought by supply chain relationship transactions occupies a major position,thus aggravating the overall enterprise risk and increasing the cost of equity capital.Secondly,the impact of supply chain relationship transaction on the cost of equity capital is mainly realized through two paths:operational risk and information risk.This conclusion shows that relying on supply chain relationship transaction will bring many unstable factors to enterprises.On the one hand,these unstable factors lead to the fluctuation of enterprises'performance and increase the operational risk.On the other hand,they lead to the decline of the quality of public information enterprise disclosed,reduce the validity of basis for investors to accurately estimate the enterprises'future operating,thus increases the information risk.To compensate for the above risks,investors will inevitably raise their expectations of future investment returns,which eventually lead to the cost of equity capital increases.Thirdly,the impact of supply chain relationship transaction on the cost of equity capital is heterogeneous in different institutional environments.Specifically,the effect of supply chain relationship transaction on the cost of equity capital is mainly embodied in the enterprises under high marketization process or high legalization level.This conclusion shows that institutional environment has a great influence on the mechanism of effect of supply chain relationship transaction.When institutional environment is imperfect,supply chain relationship transaction can play the advantage of relational contract and promote the cooperation between supply chain members',so the cost of equity capital increases not obviously.When the environment is perfect,the power balance of all parties in the supply chain relationship transaction is not easy to maintain,opportunism and other encroachment behaviors increase significantly,enterprise risk increases furtherly,and the cost of equity capital increases more obviously.Fourthly,the impact of supply chain relational transaction on the cost of equity capital is heterogeneous in different director network position.Specifically,the effect of supply chain relationship transaction on the cost of equity capital is mainly manifested in the enterprises with low centrality or few structural holes.This conclusion shows that director network not only brings key resources and effective information to enterprises,improves the governance role of directors and reduces enterprise risks,but also helps to stabilize the partnership among supply chain member enterprises',enhance the sustainability of supply chain relationship transaction,and reduce the opportunities "embezzlement" motive of member enterprises,thus inhibiting the supply chain relationship transaction on the cost of equity capital.The innovations and contributions of this study are mainly reflected in:Firstly,previous studies have examined the factors influencing the cost of equity capital mainly from the macro-institutional environment and the micro-enterprise characteristics.While this paper explores how supply chain relationship transaction influencing cost of equity capital from the perspective of the trading relationship between supply chain member enterprises',based on the institutional incentives of supply chain relationship transactions in China's unique business practices.This enriches the research literature on the impact factors of the cost of equity capital and provides theoretical basis and empirical data for managers to improve the level of supply chain relationship transaction management.Secondly,previous studies explore the overall impact of supply chain relationship transactions on the economic consequences of enterprises mainly based on theoretical analysis and logical reasoning.This paper further analyzes the path of impact-operational risk and information risk,and verifies this through the intermediary path test method,which enriches and deepens the internal mechanism of the impact of supply chain relationship transaction on the cost of equity capital.Thirdly,this paper extends the applicability of supply chain relationship transaction effectting the cost of equity capital.Aiming at the institutional incentives and social relationship attributes of supply chain relationship transaction,this paper analyzes the heterogeneity of the impact of supply chain relationship transaction on the cost of equity capital in different institutional environments and director network positions.It avoids the "one-size-fits-all" view of the impact of supply chain relationship transaction on the economic consequences of enterprises and provides more powerful empirical evidence for enterprises to practice and manage supply chain relationship transaction scientifically and for market regulators to formulate relevant policies for supply chain relationship transactions.