Research On The Effect Of Restatement Of Financial Statements On The Cost Of Equity Capital Of Listed Companies

With the continuous improvement of the internal control information disclosure laws and regulations in China and the strong support from relevant policies,more and more managers and external information users begin to pay attention to "financial restatement".At the same time,as the primary consideration when listed companies analysis financing decision,the influencing factors of equity financing cost also changes with the continuous improvement of China's capital market..In recent years,financial restatements more frequently,which not only leads to the asymmetric information of enterprises increased,but also a serious impediment to the healthy development of the capital market,and even make the enterprises fall into the financing difficulties.Unlike most literature in the past,this paper focuses on the economic consequences of financial restatements on the cost of equity capital.In this paper,the financial restatement is divided into different types of financial restatement,which is different from the rest of the financial restatement.The impact of the study on the cost of equity capital can help to gain a deeper understanding of the economic consequences of financial restatements.In addition,based on the combination of normative research and empirical research,this paper firstly reviews the domestic and foreign literatures on the financial restatement and the cost of equity capital,and summarizes the basic theory that the financial restatement affects the cost of equity capital,namely principal-agent theory,Asymmetric theory,signal transfer theory and efficient market theory.Then it analyzes the development history and current situation of financial restatement system in China,and analyzes the mechanism of financial restatement on the cost of equity capital from the three aspects of stock liquidity,market forecast risk and expected cash flow.In the empirical analysis stage,by using descriptive statistics,Pearson correlation test and linear regression analysis.this paper finally verifies the correlation between financial restatement and cost of equity capital.At the end of this paper,the research conclusions are drawn:financial repeat will lead to the cost of equity capital of listed companies is significantly higherr;compared to the non core business indicators of financial restatements,financial restatement of the core business indicators will cause the cost of equity capital companies increasing.Through combining theory with empirical analysis,this paper puts forward some policy recommendations from three aspects: external supervision,corporate governance and investors' own quality.Firstly,the main body of market economy should play a supervisory role,the government sound financial restatement laws and regulations to improve.Secondly,listed companies should improve internal accounting control and strengthen the board of supervisory functions,in addition,listed companies should also strengthen the role of the internal audit committee.Thirdly,investors should have the basic knowledge,establish the correct investment philosophy.