An Empirical Study On Investor Relation Management To The Cost Of Equity Financing Of Chinese Listed Companies

Investor relations management (IRM) is a strategic administration behavior of maximizing the enterprise value, by using the knowledge of finance, communication and marketing. At the present stage of our country, the research of IRM theory has positive meanings in perfecting the capital market of our country and standardizing the development of the publicly listed corporations. As to the whole capital market, IRM can help to arouse the investors' consciousness as shareholders, to strengthen the investor's confidence, to perfect the mechanism of the market pricing and to improve the disposing efficiency of the market; As to the publicly listed corporations, IRM has the function of perfecting company's administration structure, widening the company's financing channel, raising the financing price, reducing the financing cost, managing the investor's expectancy, and stabilizing the stock price.Present studies have largely been limited to "what" (concept), "why" (motive) and "how"(methodology). Combine development situation of IRM with protection of minority shareholders, the author swift attention to the space of association between IRM and cost of equity financing. It gives a new perspective on studying value of IRM. This paper studies the influence of IRM quality on the cost of equity financing using Chinese listed companies in Shenzhen stock market and Shanghai stock marker as research sample. The objective is to explore whether the quality of IRM has positive influence on the cost. Research method: This paper choose residual income model to measure the cost of equity financing, through the introduction of the latest evaluation system of the IRM to assess the results of China's publicly listed corporations for analysis. On this basis, the author created multiple regression model to combine IRM with the cost of equity financing. Our analysis shows that there is negative relation relationship between the IRM and the cost of equity financing, controlling B, company scale, B/P, leverage and asset turnover. A problem worthy to be pointed out is that remarkable relationship in 2005 is better than 2004. The reason possibly is continuous development of IRM.In summary, we should strengthen to understanding for IRM and the cost of equity financing in the process of market economy construction. It can help us to deeply develop shareholder structure reform, on which focus protecting minority shareholders'rights and interests. Clearing this relation can promote development of IRM. At the same time, it also helps investors fully exert subjective activity, to have investors'interests infringed upon.