Product Market Competition,Performance Of Social Responsibility And Cost Of Equity Capital

The complex corporate activity in modern economic society is to raise capital from the market and to invest,the purpose is to achieve more profit and to realize enterprise survival.Therefore,investment financing and working capital management are the most basic and important contents of financial management.These parts are interlocked,and each link is crucial to the company.As one of the core activities of financial management,equity financing is of great significance in theoretical and practical circles.The cost of equity financing is the return on investment proposed by investors after weighing the risks and benefits.Most existing literature studied the influence factors of company equity financing costs from the angles of board governance,management incentive,disclosure of financial information and the legal protection of investors,market regulation,political association,but ignored an important external factor-product market competition and an important internal factor-corporate social responsibility performance level.The product market competition in this article means that in the market there are two or more than two enterprises need the same resource,there are competition relationships between them.The common methods of measuring product market competition are market concentration index,profit index,we often use market concentration index such as HHI index to express product market competition.Corporate social responsibility behavior means in addition to creating profits,to promoting economic development and to abide by the law,enterprises should take some ethical behavior,such as be liable for society and charity.Social responsibility requires enterprises to surpass profit target in the process of day-to-day operations,however,this requirement is a natural contradiction with the purpose of the enterprise.Can we encourage enterprises to actively fulfill their social responsibilities to maintain good corporate social image and reputation from the perspective of equity financing cost? Whether the product market competition as an important external environmental factor will affect the relationship between the performance of social responsibility and the cost of equity financing? Under the background of increasingly fierce competition environment,companies are looking for the balance of the stakeholders' interests,an urgent problem is to adjust the enterprise behavior according to their own competitive characteristics of the industry to obtain lower cost capital,and to achieve better development.There are six parts in this article,first is the introduction,the first part mainly introduces the research background,the research significance,the research methods and the innovation points;The second part is the literature review,which introduces the research results of product market competition,corporate social responsibility and equity financing cost from domestic and foreign academic community.The third part puts forward the article hypothesis from the theoretical basis and the influence path.The fourth part introduces the sample variable selection and the empirical study design.The fifth part is the analysis of empirical results,including sample descriptive statistics,preliminary correlation analysis and regression analysis.The sixth part puts forward the research conclusions based on the empirical results,puts forward the policy suggestions based on the conclusion,and puts forward the shortcomings of this paper and the prospect of future research.Based on agency theory,full information theory and stakeholder theory,this paper divides the sample into state-owned listed companies and non-state-owned listed companies,analyzes the relationships between product market competition,social responsibility and corporate equity financing cost under different property rights,divides HHI index into low competition and high competition market,analyses the relationship between the cost of equity financing and social responsibility performance in the two markets.Considering the influence of the global financial crisis in 2008,and the PEG model requires data two years later,this paper takes data from Shanghai and Shenzhen stock markets from 2009 to 2014 as the research object,uses HHI index to define product market competition,uses social responsibility contribution value per share to define social responsibility performance,uses PEG model and OJ model to define equity financing costs,builds formula between the variables.Using Excel software to process raw data,using STATA software to get descriptive statistics,correlation analysis and regression analysis.This paper studies the relationship between social responsibility performance and the cost of equity financing,then discusses whether the different degrees of industry competition adjust the relationship between them,finally uses the alternative variable to carry on the robustness test and endogenous test.The study found that: 1.On a certain basis,the better the social responsibility performance,the lower the cost of equity financing of non-state-owned listed enterprises,there is no significant relationship between social responsibility performance and the cost of equity financing in state-owned listed enterprises.2.In non-state-owned enterprises,the more competitive the product market,the more obvious the negative correlation between social responsibility performance and the cost of equity financing.In state-owned enterprises,there is no such regulation.3.In low competition market,the negative relationship between social responsibility performance and the cost of equity financing is obvious in both state-owned listed enterprises and non-state-owned listed enterprises..This paper studies the relationship between social responsibility performance and equity financing cost,discusses whether product market competition level will influence the relationship.Not only explores the enterprise governance function of social responsibility and product market competition from the traditional angle,also distinguishes between state-owned listed enterprises and non-state-owned listed enterprises,distinguishes between high competition environment and low competition environment,the results can help enterprises taking better measures according to their own competition environment and property rights,encourage enterprises to actively fulfill the social responsibility,speed up the construction of a harmonious society.