The Research On The Influential Factors Of The Cost Of Equity Capital About Listed Companies In China

The cost of equity capital is the primary consideration element when the listedcompanies make financing decisions. Since Myers proposed a financing order in1984,many domestic and foreign scholars have analyzed the impact factor of the cost of equitycapital in theoretical and empirical way, the conclusion find that the financing order ofChina’s capital market countered to the order those scholars proposed. Domestic scholarsattribute to the low financing cost of equity of Chinese listed companies. Here we analysisthe influence factors of the cost of equity financing, which is aimed to provide theguidance for the Investment decision-making and explore the different financing behaviorof different listed companies.We first introduce the definition, approach, function and composition of the cost ofequity capital. Then, we show the econometric model of the cost of equity capital andchoose3econometric models, which is the theoretical foundation of the empirical analysis.Secondly, we introduce the influencing factors of financing cost of equity capital from themacroeconomic and microeconomic aspects, which are the basis for the researchhypothesis we proposed. And last, the influencing factors are analyzed by the way of static(sectional data) and dynamic (panel data). The sectional data, Shanghai Stock ExchangeListed Manufacturing Companies in2011, is analyzed for the influencing factors bystepwise regression analysis method. We select the data of Shanghai Stock ExchangeListed Manufacturing Companies from2007to2011as the panel data, after the unit roottest and cointegration, then choose the mixed effect model after F-test and individual fixedeffect model after Hausman test in panel model.In conclusion, BM, turnover rate, ownership concentration, financial constraint andpolitical connections are always the variables of final model in any case, in addition,symbols of regression coefficient are consistent with the hypothesis except turnover rate,which indicates those5variables have high explanatory ability for the cost of equity financing. In sectional analysis, firm size and enterprise growth do not pass the test ofsignificance, but after we join the time factor they appear in the final revised panel dataregression results.