Study On The Influence Of Corporate Social Responsibility Information Disclosure On The Cost Of Equity Capital

Enterprises in the pursuit of the maximization of the economic benefits in production and business activities will produce negative externalities, which the enterprises in order to compensate should take social responsibilities through some methods including releasing social responsibility reports. The researches about the disclosure of the social responsibilities information among the theorists have become research focuses, plenty of research contents and achievements fuel the enterprises to take the social responsibilities initiatively. In fact, the corporate information disclosure has an important influence on the cost of equity capital. High quality information disclosure can reduce information asymmetry between investors and firms, improve stock liquidity and reduce investors’ risk estimation and required rate of return, thus reducing the cost of equity capital. As a rational market entity, firms are adequately motivated to meet the information needs of investors by social responsibility information disclosure. So this paper demonstrates that the research and exploration of the effects and the influences on the equity capital of the enterprises through the disclosure of the social responsibilities information will have important theoretical and practical significance in the boosting of the wholly serial social responsibilities-taking of the enterprises.Small and Medium Enterprise Board occupies important status in China, but only few researches have been done on the theme. So setting small and medium enterprise board as the research background and the disclosure of the social responsibilities information of the enterprises as the main topic, based on the equity capital which is one of the financial core concepts of enterprises, this paper researches on the influences of the social responsibilities information disclosure and its quality on the cost of equity capital and provides evidence for the listed companies to initiatively take social responsibilities. Firstly, this paper simply introduces the concept of social responsibility and the study achievements about its information disclosure by classifying and analyzing the researches of the previous scholars, meanwhile showing the estimation model of the cost of capital utilized by this paper and the reasons of utilizing the model. Secondly, the research hypothesis is introduced in this paper based on agency theory, asymmetric information theory and stakeholder theory. Thirdly, this paper carries out empirical design and research sampling the relevant data of the small and medium enterprise in the period of 2011 to 2014, marking the 471 corporate social responsibility report and establishing model, analyzing the influences of the social responsibilities disclosure and its quality on the equity capital cost. The research results show that if the enterprises are able to fully disclose the social responsibilities information, then the equity capital cost of the enterprises would decline significantly, and the better information disclosure quality an enterprise owns, the lower equity capital cost the enterprise has. Finally, this paper gives suggestions and proposals on how the enterprises take social responsibilities and how the enterprises disclose the social responsibilities information to the public society through summarizing the research results.