Asset-light Operations And Cost Of Equity Capital

With the development of economic globalization and the deepening of economic system reform in China,the industrial transformation and upgrading have been further accelerated in parallel,and the market demand has become increasingly saturated,and many traditional industries have experienced overcapacity,insufficient core competitiveness of products and declining business performance.Therefore,in order to seek long-term stable development in the competitive tide,enterprises are required to improve their competitiveness and win the first opportunity for development.The emergence of asset-light operation model provides a new development path for enterprises to build up their core competitiveness and maximize their value,which has become the focus of attention of both academic and practical circles.It is undeniable that the asset-light operation model can occupy the high-end part of the industrial chain,which is an inevitable product of rapid economic development.However,compared with other enterprises,the proportion of fixed assets such as equipment is reduced,which leads to little advantage in indirect financing such as bank mortgages.However,the scale of endogenous financing is limited,and enterprises need large amount of long-term financial support for R&D,marketing and other activities,so relying on their own funds as the main input is inevitably stretched,while equity financing can provide more sustainable development momentum for enterprises.Then,how to further reduce the cost of equity capital and win the financing advantage is a real problem worthy of attention.This thesis selects all A-share listed companies in China from 2010-2018 as a research sample to further analyze the possible impact of asset-light operations on the cost of equity capital and explore its specific impact path based on core competitiveness theory and smile curve theory.In addition,manufacturing and non-manufacturing industries differ greatly in various aspects of operation,and the economic environment faced by enterprises in the market without the same degree of product competition is also very different,and the realization of the positive value effect of asset-light operations is also inseparable from the strong support of scientific decision-making by the management of enterprises,while managers,as the decision makers of the production strategy of enterprises,implement reasonable and effective incentives for the management is to promote asset-light operations to achieve Therefore,this paper further analyzes the heterogeneity of this effect from the perspectives of industry nature difference,product market competition and management equity incentive.The results show that(1)asset-light operations are significantly and negatively related to the cost of equity capital,and this finding holds after robustness tests using propensity score matching,instrumental variables,variable substitution,and lagged variables,indicating that asset-light operations are effective in reducing the cost of equity capital;(2)the impact mechanism tests reveal that asset-light operations reduce the cost of equity capital mainly by improving competitiveness and reducing(3)The moderating effects of different industries,product market competition,and management equity incentives show that manufacturing industries rely more on product differentiation to gain market advantages than non-manufacturing industries,so the improvement of product and overall competitiveness of manufacturing industries by asset-light operations is more obvious and the cost reduction effect is more significant.In the fierce product market,the agency problem of enterprises is relieved and they face more market pressure,which drives them to act,and the strong investment of asset-light operation in R&D and marketing will gain higher competitive advantage and thus lower cost of equity capital;when the degree of management equity incentive is high,the management prefers to invest in R&D and can form a strong competitive consciousness,work hard and control risks effectively.The implementation of asset-light operation will bring higher value return and thus lower cost of equity capital.The possible contributions and implications of this thesis are:(1)this thesis explores the relationship between asset-light operations and cost of equity capital from the perspective of cost of equity capital,which adds some empirical evidence to understand the economic consequences of asset-light operations and expands the research on the factors affecting cost of equity capital;(2)the analysis is conducted from three perspectives: competitiveness enhancement effect,operational risk effect,and agency-derived effect.(2)To explore whether asset-light operations lower or raise the cost of equity capital from three perspectives,namely,the competitiveness enhancement effect,the operational risk effect and the agency-derived effect,in order to clarify the specific mechanism of the impact of asset-light operations on the cost of equity capital.(3)consider the relationship between the cost of capital,the degree of competition in the product market and the degree of management’s equity incentives from the perspective of the cost of capital effect.