Mediareport,Investor Sentiment And Cost Of Equity Capital

As we all know,with the rapid development of the global economy,the research topics in the field of financial management have become even richer and the content of research has become more in-depth.However,no matter how academic research directions and trends change,our research on capital costs has not stalled.From a macro perspective,the cost of capital is a key indicator for examining the development trend of the financial market,and it is also the key basis for the creation and implementation of laws and regulations in the securities market.At the same time,on the microscopic level,the cost of capital also plays an important role in the management and other details of each company.It can be seen that regardless of the macro and micro perspectives,the cost of capital is of great significance.The cost of equity capital refers to the necessary rate of return that a listed company occupies for the equity capital invested by investors.Therefore,the cost of equity capital is more valued by management and investors.This is closely related to the interests of investors.As scholars increasingly study the influence of external environmental factors on the cost of equity capital and the increasing intelligence of human life,this article will focus on another external environmental impact factor-the media.The discussion on the cost of equity capital that has just begun in the academic world focuses on its internal and external factors.Moreover,the internal factors mainly include the nature of the company,the internal regulations of the company,the nature of the property rights,and the quality of financial and non-financial information disclosure of the company.The external factors mainly include the state's laws and regulations,relevant state rules and regulations,and the degree of economic market growth.Nowadays,scholars pay more and more attention to the cost of equity capital,and their external environmental factors are gradually explored.With the increasingly intelligent social life,it is believed that people are relying more and more on electronic devices.The influence of new media on human daily life is also becomingmore profound.Through new media,we can learn everything in the world without leaving the door.We can learn about the major events and events that have taken place in the world.More and more people are concerned about the economic development trend at home and abroad through the media,and even more will use it to determine stocks.The sale and so on.The influence of media attention on corporate cost of equity capital can be explained mainly in two aspects:corporate governance and investor sentiment.The corporate governance role of the media is a double-edged sword.It can be seen from the case that the media's in-depth coverage of listed companies can influence the price of the stock by affecting investor sentiment.But media reports are good for listed companies.Can it reduce the company's equity financing costs?Does the media as a " fourth power " independent of legislation,administration and justice play a positive role in corporate governance?Under the background of China's emerging market economy,is the media's in-depth coverage of listed companies able to exert effective corporate governance to reduce the company's capital costs?Can the media influence the cost of equity capital of companies by encouraging investors?In the end,how does the media reflect the cost of capital through its mechanism of action?This article discusses the above issues,combines the basic theory of behavioral finance,relaxes the preconditions of "market fully effective" and "rational person"assumptions,and constructs a new measurement model of cost of equity capital—that is,taking into account investors' risks perception and risk appetite equity capital cost models are more consistent with the nature of media reporting and are more realistic;Moreover,the existing capital cost model cannot be used to measure insolvent companies.The model established in this paper is more objective.It broadens the harsh preconditions of existing models and can measure companies that are insolvent.This paper selects the annual data of the A-share listed companies of the China Shenzhen Stock Exchange for the period of 2011-2015 as the research object,estimates the cost of equity capital considering the risk perception and risk appetite of investors,and constructs a multivariate linear regression model and a Mediation test model.The least squares method was used to empirically test the relationship between media reports,investor sentiment and corporate cost of capital.The empirical research results show that:(1)Frequent reporting of media depth can stimulate investor sentiment.The level of media coverage of listed companies is positively related to investor sentiment;(2)Investor sentiment is negatively correlated with the cost of corporate equity capital,ie,the higher the investor's sentiment,the higher The lower the cost of equity capital,(3)media reports can influence the cost of equity capital of companies by encouraging investor sentiment.Moreover,the fixed effect regression was used for robustness test,which was consistent with the results of the least-square regression.Finally,an additional test was conducted to group the sample companies and explored the extent to which media reports influenced the company's equity capital costs for different company characteristics and company characteristics,and verified the empirical findings accordingly.This article combines the background of China's economic development,and combines theoretical and empirical methods to study the relationship between media coverage,investor sentiment,and corporate capital costs.Research shows that media reports can help reduce the company's equity capital cost.This points the way for companies to try to reduce the cost of equity capital to increase the value of the company.At the same time,it also provides positive growth for enterprises in all areas of China,enhances investor protection,and strengthens investment.The degree of maturity has a certain guiding significance.