An Empirical Research On Manufacturing State-controlled Corporate Governance Of Listed Companies Impact On The Cost Of Equity Capital

The financial cost is the core concept of capital theory. Unlike the accounting cost theory, the cost of capital means the rate of return on capital. And the cost of equity capital is the minimum rate of return the request to common stock shareholders. From the perspective of enterprises, it is also pay the price of using equity financing with enterprise. The equity capital cost of company is a significance indicator of corporate finance performance, reflecting the company's financing capacity. Discussion what factors decide the corporate finance costs are importantly to the enterprises reasonable financing. Because of this, there have many studies of the factors affecting the cost of capital. In recent years, there have some research about corporate governance impact on the cost of capital in domestic and international.In2004 State-controlled listed companies which possession 67% total number of all listed companies in China have a prominent issue is that occupy high proportion of state-owned shares due to the absence of the main holdings of state-owned shares and administratively. What kind of influence with these problems will be done for the cost of capital with state-controlled listed companies? And specifically, the management structure will be impact the equity capital costs? If really happen, how extent?This paper based on these issues, on the basis of research literature, established the econometric model of corporate governance impact on the cost of equity, using 2004 Shenzhen Shanghai Stock Exchange 91 state-controlled listed company's data, first using the remaining proceeds for discounted variable model equity capital costs, then test the cost of equity capital reasonably, finally, empirically test the corporate governance of listed state-controlled factors to the cost of equity capital. The results show that between shares concentration and equity capital costs have positive correlation in state-controlled listed companies. And others governance factors like shares outstanding ratio, board size, the ratio of independent directors, two grade-one showed no obvious correlation.This paper take the empirical research and normative study in both ways. On this basis, inspect the state-controlled study of corporate governance of listed companies on the impact of cost of capital and analysis the results. Finally this paper raise a number of recommendations and research prospects to improve the state-controlled governance structure of listed companies.