How Does We-Media Information Disclosure Affect The Cost Of Equity Capital?

In 2009,Sina Weibo went online,causing a wave of we-media in China.Because Weibo has the advantages of low threshold,diverse content,and fast transmission speed,more and more listed companies have registered Weibo accounts and released a large amount of information.And information disclosure has an significant impact on the companies’ cost of equity capital.Existing studies have mainly investigated information disclosure in traditional media such as formal announcements.This paper discusses the impact of the effective information disclosure through Weibo by listed companies on their cost of equity capital from the emerging perspective of Weibo.This paper selects Hu-Shen A-share listed companies that opened Sina official Weibo from 2011 to 2018 as a sample,collects Weibo data manually,and uses relevant data from databases such as CSMAR and WIND to conduct research.This paper first carries out multiple regression for panel data,and then conducts robustness test by replacing the measurement method of the explained variables,lagging independent variables,using propensity score matching method and instrumental variable method.Secondly,this paper examines the mediating effect of stock liquidity and analyst forecast bias in the relationship between Weibo disclosure and the cost of equity capital.Finally,this paper uses group regression to test the impact of Weibo information disclosure on the cost of equity capital of companies with different characteristics.The empirical results of this paper show that:(1)Weibo disclosure has an information function,but not that the more the number of releases,the better,but the more useful information releases,the better.The effective financial information released by listed companies through Weibo can reduce the cost of equity capital;(2)Further divide financial information,this paper finds that both repetitive financial information and new financial information disclosed through Weibo can help reduce the cost of equity capital;(3)Through mechanism test,this paper proves the mediating role of stock liquidity and analyst forecast errors in the relationship between Weibo information disclosure and equity capital cost;(4)Compared with state-owned companies,large companies and companies that have been established for a long time,non-state-owned companies,small companies and newly-established companies’ Weibo disclosure has a greater impact on their cost of equity capital.This paper studies the impact of listed companies’ information disclosure through official Weibo on their cost of equity capital,confirms informativeness of Weibo,enriches the research content of we-media information disclosure and cost of equity capital,and reminds the companies’ management to improve quality of the information disclosed through we-media and avoid flooding the official Weibo.