Study On The Impact Of Social Responsibility Information Disclosure Quality On The Cost Of Equity Capital And Debt Capital

In recent years, the academia and enterprises try their best to explore the effective ways to reduce the cost of capital, and they both focus on the topics of the influence factors of the cost of capital. Information has been proved to be another important factor which has influence on the cost of capital. With the emergence of the non-financial information in capital market and rapid development, the public pay more attention to non-financial information disclosure. Researches on the influence factors of the cost of capital in the domestic and overseas are transferred from financial information disclosure to non-financial information disclosure. Since 2008, in China the relevant regulations are formulated and issued to standardize and guide corporate social responsibility information disclosure. And the listed companies are asked to disclose their social responsibility report. Until 2012, the amount of the corporate social responsibility reports which are disclosed by the listed companies has reached more than two thousand. As the development of social responsibility information disclosure, it will play an important role. Then if social responsibility information disclosure will have an influence on the cost of equity capital and debt capital which the list companies face? And whether there is a significant difference between the two kinds of impact of social responsibility information disclosure on the cost of capital? On the one hand researches on these issues are in further to explore the influence factors of the cost of capital, on the other hand also enrich the results of researches on social responsibility information disclosure usefulness.First, this paper theoretically analyzed the impact of social responsibility information disclosure quality on the cost of equity and debt capital. Then employ a sample of the listed companies which disclosed social responsibility reports from 2009 to 2011, use PEG model to estimate the cost of equity capital, measure the cost of debt capital with a proxy variable which is defined as interest payments plus interest capitalization divided by average total liabilities, evaluate social responsibility information disclosure quality with dummy variable based on the grade of social responsibility reports provided by Rankins. At last establish multiple linear regression models to make empirical test on the influence and difference of social responsibility information disclosure quality on the cost of equity and debt capital.The results proved that higher quality of social responsibility information disclosure will reduce the cost of equity and debt capital. Moreover, the impact of social responsibility information disclosure on the cost of equity capital is significantly stronger than that on the cost of debt capital. It means that relative to the creditors shareholders will pay more attention to social responsibility information disclosure. Based on the above conclusions, give the following suggestions:on the one hand the listed companies should improve their quality of social responsibility information disclosure on the premise that they take positive part in social responsibility activities so that they can reduce their cost when financing. And on the other hand the government should establish social responsibility information disclosure evaluation mechanism and information disclosure regulation to offer more detailed and authentic social responsibility information for reference. At the same time, issue more perfect social responsibility information disclosure policies to make social responsibility information used by more diversified stakeholder so that make full use of the advantage in reducing the cost of capital.