Research On The Relationship Between Disclosure Level Of Social Responsibility Information And Cost Of Capital

With the rapid development of society and economy, social responsibility is playing an increasingly important role in the sustainable development of enterprises. More and more enterprises realize the importance of shouldering the social responsibility. Enterprises no longer just focus on the immediate interests, but more voluntarily take the social responsibility. So the capital effect of the disclosure of enterprise social responsibility information is becoming a hot research issue. However, there is no agreement on how the social responsibility information disclosure impact on the cost of capital for Chinese listed companies. To investigate the capital effect of social responsibility disclosure on Chinese listed companies, this paper takes the A-Shares public companies of Shenzhen Stock Exchange and Shanghai Stock Exchange as a sample, by which social responsibility reports between 2013 and 2014 were announced. Meanwhile we test the relationship among disclosure level of the social responsibility reports, cost of equity capital and cost of debt capital by theory and demonstration. Finally, we consider the influence of industry characteristics in order to investigate the difference of the impact of social responsibility information disclosure on the cost of capital between heavy pollution industries and others.The results show that, 1) the companies with higher disclosure level of social responsibility report has lower cost of debt capital and higher cost of equity capital, but failed to pass the significance testing; 2) as for the heavy pollution industries, the companies with higher disclosure level of social responsibility report has significantly higher cost of equity capital but non-significantly lower cost of debt capital. The study investigates the relationship of social responsibility information disclosure and the cost of equity capital and debt capital cost for Chinese listed companies, then we creatively introduce industry characteristics (i.e. heavy pollution industries vs.ordinary industries) to get deep insight into the above relationship. As a result,this paper provides some management suggestions on how to improve the investor relations management and strategic planning about social responsibility. We discuss the implications of our findings for both theory and practice.