The Impact Of Information Asymmetry On The Cost Of Equity Capital

This paper focuses on that how information asymmetry brings influences to equity capital cost. Some regard information disclosure level, information transmission mechanisms and information interpretation ability as the three factors of asymmetric information. The experimental results support reverse relationship between information disclosure level and equity capital cost. Overseas experts paid much attention to the task since 1960s. The overseas theory and the empirical research indicated that the increasing level of informative disclosure can reduce the information asymmetry between investors and managers as well as among the investors, reduce the investors' anticipated risk and enhance the fluidity of stock. Thus it can reduce the cost of equity capital. However, all the above researches are carried on in mature stock market environment of the developed countries, lack of the thorough discussion on relationship between informative disclosure quality and the cost of equity capital in the emerging market.Therefore, this paper takes a stock non-finance companies from 2007 to 2008 on Shenzhen Stock Exchange SME board as the study samples. Then it discusses whether the quality of informative disclosure is helpful in reducing the cost of equity capital of listed companies and the former influencing the latter in what degrees under our country special stock market environment? Among the different characters and scales of the enterprises, whether the relationship between the quality of informative disclosure and the cost of equity capital is the same? The researches upon these questions will have the vital significance on arousing listed companies to enhance the informative disclosure on their own initiative awareness, enhancing the information transparency in stock market, reducing the financing cost of listed companies and enhancing the shareholders' value.