Research On The Quality Of Information Disclosure And The Cost Of Equity Financing

Information is one of the most important economic resource of modern economic socity,and also an invisible precious wealth of society. Effective operation of capital market is dependent on the information. The information on the market is varied. Among so many sources of information, accounting information is undoubtedly one of the most important information. With the development of economy, the role of information in capital market is more and more obvious. However, some false accounting information of the listed companies had mushroomed in the past few year. They were relating to the false disclosure of accounting information. These incidents caused a great impact on the Chinese securities market, also revealed that Chinese listed companies had lots of problems in the accounting information disclosure. How to regulate and perfect the disclosure of accounting information of listed companies to improve the quality of information disclosure has given rise to public concerns and it is the important subject that needs to be solved urgently.The relationship between the quality of information disclosure and the cost of equity financing is a fundamental problem in the field of accounting, and also is an important issue. This paper take listed companies on A-share in Shenzhen stock market during 2009-2012 as samples which meet the refinancing conditions to find the relationship between the quality of information disclosure and the cost of equity financing. It will be helpful on revealing the actual state of information disclosure of the listed companies and the main factors which affect the cost of equity financing. It also can guide the corporations’ behavior of information disclosure to reduce the cost of equity financing to improve the efficiency of capital market.Depend on the description of variables and sample test we can draw some conclusions. The higher quality of information disclosure leads to the lower cost of equity financing. Moreover, the study found that the costs of equity financing of state-holding enterprises are higher than other companies. In addition, those listed companies with a higher leverage ratio have a higher cost of equity financing. Finally, the paper proposed a series of policy recommendations based on the research results to guide the behavior of information disclosure of listed companies to help them to reduce the cost of equity financing and improve their financing efficiency.