The Impact Of Analyst’s Coverage On The Relationship Between The Quality Of Information Disclosure And The Cost Of Equity Capital

With the pace of information globalization speeding up, the investors of the company’s information disclosure quality is more and more important. And quality of information disclosure of the influence of the equity capital cost also became today’s capital markets a notable problem. Whether investors, regulators and the company itself, the information disclosure quality impact on the cost of equity capital has very important meaning. At present, the research on information disclosure quality affects the equity capital cost of scientific research mainly from two aspects. On the one hand is to improve the quality of information disclosure can improve the liquidity of the stock, reduce transaction costs, increase market demand for securities, decrease the cost of equity capital. On the other hand from the risks and rewards of investors expect perspective. When the less information disclosure, investors expect a higher risk, which demand a higher risk of returns. Conversely, when the high quality of information disclosure, investors expected risk returns will be reduced accordingly.Analyst is an important force in the capital market. Relative to ordinary investor, has a strong professional, their understanding of the capital market more thorough, more system research. Some analysts by the recent national policy, industry prospect, enterprise industry status for enterprises to do a series of cover surplus forecast analysis report. These reports give investors in the markets "buy, sell, hold" investment advice. Some existing research think they have the information intermediary function, is one of the influence factors of the capital market. They are another kind of information dissemination channel, passing the information to the investors and listed companies, and to give investors some investment advice, to make the listed company earnings forecast. Effectively to ensure the liquidity of the stock market, improve the financing efficiency of the company. And the other part of the research results show that the analysts’ conflicts of interest will affect the behavior of the analysts, analyst is more advantageous to the uninformed traders on the market, so its only added to the investors on the market of information asymmetry.By the end of 2014, listed company quantity is total 1618. The stock exchange listed shares covers industry widely, listed companies scale is different, diverse plate. Can be better more system for China’s capital market research. This thesis employs motherboard shares, the gem, small and medium-sized board level for examination and assessment of seven years of information disclosure of listed companies as A measure of the information disclosure quality, using GLS model to calculate the cost of equity capital, to study the relationship between the two. Then, in order to measure coverage, an analyst at past analysts tracking number of listed companies, research analyst coverage whether the quality of information disclosure and the relationship between equity capital cost implications.In this thesis, the structure is for the following parts:The first part is the introduction. Introduced the thesis selected topic background and research significance, put forward in this thesis, the research framework and use of research methods, and innovation points.The second part is the literature review section. The quality of information disclosure at home and abroad and the equity capital cost; Analyst coverage and research achievements of equity capital cost, on the basis of a brief evaluation.The third part for the analysis of theory and deduced. This thesis respectively from the relationship between the information disclosure quality and cost of equity capital; Analyst coverage on information disclosure quality and cost of equity capital for the relationship, the influence of these three concepts, two Angle detailed theoretical analysis and hypothesis are derived.The fourth part is the research design part. This part expounds the equity capital cost measurement method, this thesis measure of the quality of information disclosure, as well as the indicators measure analyst coverage. Choice of equation of control variables, and the establishment of multiple regression model.The fifth part is the empirical analysis part. To expounded in this thesis, the main data sources and sample selection. Descriptive statistics, correlation analysis, multiple regression analysis, the stability test of hypothesis of this thesis is proved. Systematic analysis has explained the result of the test.The sixth is divided into empirical research results. To elaborate this article research results, this thesis analysis the contribution of the results of the study, the lack of objective analysis and research.In this thesis, the conclusion and significance:Conclusion 1:the quality of information disclosure is negatively related to the equity capital cost. We proved that the quality of information disclosure can decrease the cost of equity capital this conclusion, increase the active initiative of improving the quality of information disclosure of listed companies.Conclusion 2:coverage, an analyst can strengthen the information disclosure quality impact on equity capital cost. Descriptive analyst focus more on the same level of the disclosure of information, can reduce investors estimate the risk, and thus the risk/reward, decrease the cost of equity capital, speeding up the stock liquidity. The company decision-makers to decrease the cost of equity capital tend to have more coverage, an analyst, to achieve this goal they must strict information disclosure, internal control, to create more business window, management innovation. And securities firms in response to the market demand is also more coverage to the recruitment of analyst group training, more conducive to the cultivation of talents, is conducive to the development of the industry. Analyst group the number of quality improvement at the same time bring capital market investors are more rational professional investment analysis, to make it more scientific rationalization of investment.