Environment Uncertainty,Corporate Strategic Difference And The Cost Of Equity Capital

With the promotion of China's marketization and the gradual development of modern corporate management in China,the economic consequence of the difference of corporate strategy has become the frontier of current finance research.Among them,the impact of corporate strategic differences on the cost of equity capital has become a concern in today's capital market.Regardless of the investor,the supervisory department and the company itself,the corporate strategy difference has the very important significance influence to the cost of equity capital.At present,the study of the economic consequences of corporate strategic differences is mainly reflected in the following three aspects.On the one hand,the increase of the corporate strategy difference will increase the corporate overall risk,the industry's conventional strategy has proven to be well protected against industry-standard risks,and deviating from the industry's conventional strategy often means more uncertainty and the questioning of trading partners which leads to risk.On the other hand,strategic differences in the performance of corporates tend to have greater volatility,which make corporates prone to extreme performance and increase the uncertainty of business operation.The last one is that outside investors do not understand the information that the big strategic difference enterprises disclose,thus increasing the degree of asymmetric information between external investors.The impact of these three aspects affects the investor's assessment of the necessary rewards to a large extent,thus affecting the cost of equity capital.Overall,the greater the degree of corporate strategic differences,the greater the cost of equity capital.Corporates as a part of the economic environment and corporate strategy as a tool to deal with the relationship between their own and external environment,so consider the impact of corporate strategy on the impact of the external environment must be affected.Environmental uncertainty as a corporate must pay attention to the problem,has been proved that the increase in environmental uncertainty will increase the risks faced by corporates,increase the uncertainty of business management,increase the volatility of enterprise performance and enhance the degree of asymmetric information between corporates and external investors.Moreover,the existing research shows that environmental uncertainty plays an important role in regulating the cost of equity capital.It is also found that the rising of environmental uncertainty will magnify and strengthen the positive relationship between the corporate's strategic difference and the cost of equity capital.This thesis chooses A-share companies listed in Shanghai and Shenzhen in the past 2007-2015 years as the research object and uses various methods to test the hypothesis of this paper.By using PEG model to calculate the cost of equity capital and construct six indexes to measure the difference of enterprise strategy so to studies the relationship between them.Moreover,the fluctuation of the sales growth rate of the listed company is to measure the environmental uncertainty of the corporates,so to studies the moderating effect of environmental uncertainty on the relationship between corporate strategic difference and equity capital cost.The structure of this article is the following:The first part is introduction.This part mainly introduces the research background and significance of this paper,introduces the research methods and contents of this paper and sums up the possible research innovation in this paper.At the same time,the structure of this paper is described.The second part is literature review.This part mainly enumerates the relevant research results on the influence factors of equity capital cost,the influence of enterprise strategy on enterprises and the moderating effect of environmental uncertainty.In addition,this paper reviews and summarizes relevant literatures at home and abroad so to enlighten the further research.The third part is the theory analysis and the hypothesis derivation part.The theoretical starting point of this paper includes information asymmetry theory,corporate strategy theory and risk compensation theory.This paper analyzes the relationship between the strategic difference of listed companies and their cost of equity capital cost and then analyzes the moderating effect of environmental uncertainty on the relationship between enterprise strategic difference and equity capital cost respectively.Through the basic theoretical analysis to find the agreement between the phenomenon and the theory to provide ideas for the research hypothesis.The fourth part is the design of research.This article selects the appropriate sample data from the CSMAR and the WIND database and defines the variables for the sample data.The model is designed by selecting the appropriate explanations,interpreting variables and corresponding control variables.The fifth part is the empirical analysis.This part is the demonstration of results which is divided into descriptive statistic,correlation coefficient test and model regression result.The final part is the conclusions,suggestions and insufficient of this paper.Based on the above empirical study,this paper studies the conclusion,analyzes the conclusion and puts forward further countermeasures and Suggestions to realize the meaning of writing in this paper.Finally,the paper summarizes the shortcomings and prospects of the research.The main conclusions of this paper are as follows.First,the corporate strategic difference and the cost of equity capital are positively correlated.Secondly,the rising of environmental uncertainty will enhance the positive correlation between the corporate's strategic difference and the cost of equity capital and further promote the cost of equity capital of enterprises.Based on the above conclusions,the significances of this paper are:Firstly,it provides clues and reference for China's listed companies to broaden their business strategy research field.Secondly,it provides reference and basis for the study of the influence factors of equity capital cost.Then,the paper provides evidence and suggestions for corporates to reduce the cost of equity capital from the strategic level of corporates and promote the steady development of enterprises.Finally,this paper enriches the investment decision-making research literature of investors and provides suggestions for investors' investment decision-making.The innovation point of this paper is summarized as follows:First of all,this article not only provides the new empirical evidence for the research of the influence factors of equity capital cost but also contributes to the research of the economic consequence of the enterprise strategy difference.Secondly,the research of this paper links environmental uncertainty,enterprise strategic difference and equity capital cost.This paper confirms the important role of enterprise strategic information and economic environment information in the process of investors'evaluation of enterprises,thus enriched the investment behavior research literature of the investor.