A Research In The Effect Of The Listed Companies' Disclosure Quality On The Cost Of Equity Capital In China

The research in the effect of disclosure quality on the cost of equity capital is a matter of considerable interest and importance to the public companies and supervisor, however, the association between disclosure quality and cost of equity capital is not well established and has been difficult to quantify, which is more evident in the developing countries especially. This paper studies the influence of disclosure quality on the cost of equity capital using Chinese listed companies in Shenzhen stock market as research sample. This paper chooses residual income model to measure the cost of equity capital, and construct some index to represent the total disclosure quality and earnings disclosure quality of Chinese listed companies. Our analysis shows that for the whole sample of listed companies which conduct seasoned equity offerings in the stock market, controlling 6, company scale, B/M, leverage and asset turnover, there is positive relationship between the total disclosure quality and marginal cost equity capital; there is negative relationship between the earnings radical and marginal cost equity capita; there is no remarkable relationship between the earnings smoothness and marginal cost equity capital.At the same time, this paper also selected a traditional manufacturing and emerging information technology industry to compare. The empirical result shows comparing with the manufacturing the relationship between disclosure quality and marginal cost equity capital is more remarkable in the information technology industry; comparing with the whole Shenzhen stock market, there is positive relationship between the earnings radical and marginal cost equity capita in the information and technology industry. These all indicate the investors pay more attention to the disclosure quality of information and technology industry. Finally, this paper proposes some policy implications.