Product Market Competition And The Quality Of Information Disclosure And The Cost Of Equity Capital

In the wave of the international capital market integration, the Chinese stock market not only shares the international capital resources with other countries, such as the market management resources and the information transmission resources, but also be influenced by the domino linkage effects, like the "sub-prime crisis". That means the Chinese stock market should learn to grasp the "double-edged sword" of international capital markets, so as to avoid disadvantages and to master the greatest opportunity for further development.As the critical link between the product market competition and corporate finance decisions, the quality of information disclosure by listed companies is directly related to the effectiveness of securities markets and the protection of investors rights. In this thesis, we have selected377listed companies in Shenzhen Stock market from30industries, and used five-years data collected from2006to2010to carry out an empirical analysis. We have proved that when industry competitiveness is serious, the quality of information disclosure increases. The results also show that when industry competitiveness intensified, improving the quality of information disclosure helps to reduce the cost of equity capital as well. The competition among industries has played an important role between information disclosure and corporate finance.Based on the characteristics of industry competitiveness, the securities regulators, listed companies, intermediaries and investors themselves should take measures to upgrade the information disclosure quality of listed companies continuously, so that the information disclosure could act as a "selector" and China’s stock market could integrate into the international capital market more smoothly.