A Study On Capital Cost Effect Of Intellectual Capital

Capital is the foundation for the development of enterprises, so the level of the cost of capital has a vital impact on a business, a district, even a country’s economic development. From a macro perspective, the cost of capital provides an important basis for government’s industry regulation, taxiation regulation, and business performance evaluation etc; From a micro perspective, the cost of capital is a benchmark for a business’investment and financing decisions. No matter from a macro perspective or a micro perspective, the reasonable estimation of the cost of capital is an important prerequisite for its role to play effectively. Thus there is a very important problem to clarify——what on earth affect the cost of capital? As the first core concept in finance, the application of the cost of capital is very common both among academic and practice circles. Among the current numerous studies on cost of capital, "What on earth affect the cost of capital?" has been always a controversial issues.Enterprise is not only a collection of physical capital, but a type of organization which consists of physical capital and intellectual capital. There is difference in social productivity level between different historical development stages, so different capital’value-creation ability differ from each other during a particular period, what’s more, the same capital may has different contribution to the enterprise during different period. In the era of knowledge economy, as a kind of knowledge-based "tacit assets" which can win competition advantage for enterprises, intellectual capital is gradually becoming the main driving factor of enterprise profitability, therefore, intellectual capital may provide a more powerful safeguard for the realization of investors’ required rate of return, the development and application of intellectual capital also may bring more "cheap money" for enterprises, which can contribute to the realization of the enterprise value maximization. But among the current studies on the factors affecting the cost of capital, intellectual capital has been rarely involved, this dissertation aims to try to uncover the black box "can and how intellectual capital affect enterprises’cost of capital?"Firstly, according to research and analysis of a large number of domestic and foreign literatures, this dissertation constructs a preliminary research framework theoretically on how intellectual capital affects enterprises" cost of capital, which includes total effect, direct effect or mediation effect, moderating effect.Furthermore, this dissertation gives an estimation and analysis of current level of intellectual capital and cost of capital, and makes a comparation of intellectual capital and cost of capital from three aspects:year, industry, and district. We find that there is a phenomenon that the higher the intellectual capital, the lower the cost of capital in certain years, industries, and districts, which shows preliminary that there may exists a logistic relation between intellectual capital and cost of capital.Next, in order to further clarify the effect which intellectual capital has on the cost of capital, this dissertation conducts a series of empirical test based on the relevant data of China’s listed companies from 2007 to 2013. This dissertation explores the effect of intellectual capital has on the cost of capital (the cost of equity capital and the cost of debt capital) from four dimensions:Total level of intellectual capital, human capital value-added efficiency, structure capital value-added efficiency, physical capital value-added efficiency. The whole empirical test mainly includes three aspects:Research on the total effect which intellectual capital has on the cost of capital; Research on the mediation effect. This part reveals the transmission mechanism of accounting information disclosure quality between intellectual capital and the cost of capital. Intellectual capital has both direct effect and mediation effect on the cost of capital; Research on the moderating effect. This part uses enterprise life cycle as a moderator variable, and analysizes effect which intellectual capital has on the cost of capital at different stages of life cycle.This dissertation’s result shows that firstly the higher the level of intellectual capital, the lower the cost of capital, but the effect which different types of intellectual capital on the cost of capital differs from each other:Intellectual capital value-added efficiency has a much greater effect on the cost of capital than physical capital value-added efficiency, and the effect which intellectual capital value-added efficiency and physical capital value-added efficiency have on the cost of equity capital is greater than on the cost of debt capital; Human capital value-added efficiency can significantly reduce the cost of equity capital, the cost of debt capital, and the weighted average cost of capital, but structure capital value-added efficiency can significantly reduce the cost of equity capital; Among all the types of intellectual capital, human capital value-added efficiency is the core factor which affects the cost of capital. Secondly, the improvement of intellectual capital value-added efficiency, human capital value-added efficiency, physical capital value-added efficiency all can do a great help to the improvement of enterprise’s accounting information disclosure quality, and further decrease enterprise’s cost of capital; Structure capital value-added efficiency has a significantly negatively correlation with enterprise’s accounting information disclosure quality, accounting information disclosure quality isn’t the valid intermediary variable between intellectual capital and the cost of capital. Thirdly. The relationship between intellectual capital and the cost of capital at different stages of life cycle has different characteristics:The relationship is more intimate at growth stage and maturity stage while at the recession stage it is poorer; At growth stage, stockholders pay much attention to enterprise’s human capital, but debtors consider more about how does enterprise’s physical capital affect their required rate of return; At maturity stage, more types of intellectual capital show a significantly relation with the cost of capital.At last, combined with the relevant conclusions, this dissertation puts forward some suggestions pertinently from three aspects.Firstly, from the perspective of the enterprise, when developing and managing intellectual capital, enterprises should take the intellectual capital value-added efficiency especially the human capital value-added efficiency as the core, based on which optimize the capital structure, promote the proportionate and coordinated development of all kinds of capital; strength industry regulation, implement industry differentiation management on intellectual capital; care about both intellectual capital value-added efficiency and investment scale; promote the coordinated development of regional intellectual capital; develop and manage intellectual capital pertinently according to the characteristic of enterprise life cycle.Secondly, from the aspect of the regulatory authorities, when supervising enterprises’accounting information disclosure quality, relevant departments should implement differentiation management according to the types of intellectual capital. Relevant departments should pay much more attention to the supervision of accounting information disclosure quality if the level of enterprises’structure capital is high.Lastly, from the perspective of the government, relevant government departments should perfect relevant laws and regulations in order to urge debtors care about intellectual capital more.