Chinese Listed Companies' Information Disclosure And Cost Of Capital Relations

An efficient securities market has three characteristics, that is fair, just and open. As a foundation of market "open" principles, information disclosure has been the core values and the power source of modern capital market development, and also one of the theoretical fronts in the development of modern financial economics. Disclosure theoretical model and empirical research has increasingly become an important component of modern financial theory part and also is priority areas of concern of the modern theory of corporate finance. One of the most central issues is the relationship between the cost of capital and disclosure. Cost of Capital is one of the core concepts in financial management, which is the minimum required rate of return investors, directly affecting business investment and financing decisions, deciding whether to achieve the goal of maximizing shareholder wealth. High level of information disclosure can help listed companies obtain favorable financing options, which have a major impact on the cost of capital.Research on relationship between information disclosure and cost of capital is the key issues of modern financial management.The existing research on relationship between information disclosure and the capital cost does not yet exist a complete, integrated theoretical system, and experience has not yet conclusive test. Information disclosure of listed companies has been people's attention.With the development of capital market, the raising of information disclosure level of listed companies is whether reducing the cost of capital and enhancing enterprise value and how influence cost of capital. Research on these questions on the one hand can draw the initiative of self-awareness to improve the quality of information disclosure of listed companies and enhance the transparency of stock market, on the other hand can reduce cost of capital, improve corporate value, protect investors, maintain fair and equitable and improve efficiency of capital market.Based on system theory and empirical testing, the paper excavation mechanism between which information disclosure of listed companies impacts on the capital cost, explore the relationship between information disclosure and the cost of capital, and build the comprehensive and integrated theoretical framework on the research of the relationship of information disclosure and the cost of capital.This paper studies the following conclusions:1. Information disclosure influencing on the cost of capital primarily through two channels:First, to reduce the expected risk of investors, and second, to improve stock liquidity.2. Under the framework of the traditional analysis, the paper pulls in risk factors, constructs a theoretical model to analyze, and prove with the improved quality of information disclosure, the risk of stock will decrease and the cost of the enterprise's capital will decrease.3. Under the framework of the traditional analysis, the paper pulls in liquidity factors, constructs a theoretical model to prove with the improved quality of information disclosure, the liquidity of stock increase, the premium of liquidity decrease, the part in capital cost produced by information asymmetry gradually decreased, the cost of the enterprise's capital will decrease.4. This paper carry on empirical test on information disclosure and capital cost. Based on the samples of 2006-2008 Shenzhen listed companies, this paper's study shows disclosure quality variables produce significant negative influence on capital cost, improvement of information disclosure quality can reduce capital cost. This effect originates two aspects. The first one, improvement of information disclosure quality can reduce risk, extent of risk reducing can reduce capital costs, and thereby information disclosure quality improvements can reduce capital cost. The second, information disclosure quality improvements can significantly improve stock liquidity, stock liquidity rising can reduce capital cost, and thereby information disclosure quality improvements can reduce capital cost. The article also analyzes the relative importance of risk and liquidity effects on capital cost. Through regression analysis, the paper draws the conclusion:compared with the risk factors, liquidity factor is more important. And information disclosure primarily through liquidity impact on the cost of capital.