The Information Disclosure Quality Of Listed Companies And The Cost Of Equity Capital

The research in the effect of disclosure quality on the cost of equity capital is a matter of considerable interest and importance to the public companies and supervisor. In nowadays,most researchers generally agreed that there is a negative relationship between information disclosure and the cost of equity capital. And theoretical research also support the negative association between disclosure level and cost of equity capital. But the most of the above studies are based on Western economic environment,their securities market are relatively well-developed. And there are still some deficiencies in China's Stock Market. Relative to the western developed countries, there are still some gaps. So we should consider that whether the negative relationship between information disclosure and the cost of equity capital still exits in China. We should also research that whether the quality of information disclosure in different years has the same effects to the cost of equity capital. This paper will study this issue.In this paper, we use both the normative research method and empirical research method. And in the course of the empirical study, this paper studies the influence of disclosure quality on the cost of equity capital using Chinese listed companies in Shenzhen stock market as research sample. And we use Examination results disclosed by Shenzhen stock market to measure the quality of the information disclosure. This paper chooses residual income model to measure the cost of equity capital. We examine the relationship between disclosure level and the cost of equity capital using the multiple regression model. And through the research, we find that, if we control theβcoefficient,company size, financial leverage, company growth and asset turnover, the negative relationship between information disclosure and the cost of equity capital does exist. Thus the hypotheses presented in this paper are confirmed. Through this empirical analysis, we can see that in Chinese securities market environment, the information disclosure has positive effects to the cost of equity capital. And generally speaking, we do think that good disclosure system will be propitious to development of the market, and companies will gain more and more from the enhancement of information quality. Finally, this paper proposes some policy implications.