Research On The Influence Of Media Coverage On The Cost Of Equity Capital

The cost of equity capital has always been the core topic of theoretical and practical circles,which has a decisive influence on the investment and operation of corporate projects.However,China's capital market developed late,and the current formal systems are not perfect.There are also problems such as low quality of listed companies and low quality of information disclosure.In order to make up for the risk premium of investors,the cost of equity capital of listed companies is generally high.Therefore,it is of great significance to study the factors affecting the cost of equity capital and the ways to reduce it.As an alternative mechanism of legal system,media has attracted more and more attention.As a channel to spread information,if the media can give full play to its information intermediary function and corporate governance function,it will definitely reduce the risks faced by investors and thus reduce the cost of equity capital of the company.Some scholars have discussed the impact of media coverage on the cost of equity capital of a company,but few have considered the impact of different corporate governance mechanisms.Most of the previous studies took the internal governance mechanism as the control variable or did not consider the internal governance mechanism,ignoring the impact of individual differences on the relationship.In addition,there is no consistent research conclusion on the influence of institutional investors' shareholding mechanism on the relationship between media reports and the cost of equity capital.In view of this,this paper selects A-share listed companies in Shanghai and Shenzhen stock exchanges from 2014 to 2018 as research samples,and explores the impact of media coverage on the cost of equity capital on the basis of principal-agent theory,information asymmetry theory,efficient market theory and risk-return equilibrium theory.On this basis,the paper further discusses the impact of media coverage on the cost of equity capital under different internal and external governance mechanisms.The research of this paper shows that :(1)there is a significant negative relationship between media coverage and the cost of equity capital,that is,the more media coverage on the company,the lower the cost of equity capital of the company;(2)When institutional investors hold a high proportion of shares,media coverage have a weak effect on reducing the company's cost of equity capital;(3)When the scale of the board of directors is large,the effect of media coverage on reducing the cost of equity capital is weak;(4)The integration of chairman and general manager has no significant impact on the relationship between media coverage and equity capital costs;(5)When the shareholding ratio of the largest shareholder is relatively high,the effect of media coverage on reducing the cost of equity capital is relatively weak.The innovation of this paper is to explain the influence of media coverage on the cost of equity capital with the risk-return equilibrium theory,and to discuss the moderating effect of institutional investors this external governance mechanism and the internal governance mechanism on the relationship between media coverage and the cost of equity capital,taking into account the influence of individual companies.The research conclusions of this paper can provide reference basis for better exerting the information intermediary function and corporate governance function of media reports to reduce the cost of equity capital of the company.