Study The Relationship Between The Price Information Content And The Interests Of Capital Cost

In 1968, when Ball and Brown published a paper"An Empirical Evaluation of Accounting Income data", which have laid an important position for"Information View"in empirical accounting researches. Later, as the basis for many scholars who have done extensive relevant researches around the earnings information. In recent decades , a series of theoretical and empirical studies about the relationship between information disclosure and the cost of capital for a listed company have been carried out by domestic and foreign scholars. The results of most investigation suggest that higher information disclosure level is associated with a lower cost of capital, by lowing predicted risk and improving liquidity of stock. Stock price informativeness means how much information about company fundamentals included in stock price. According to this logic that accounting information disclosure can significantly affect the cost of capital , we can get a conclusion that when much more fundamentals information contained in stock price, which can reduce investment risk, those investors may lower their required return on investment. Therefor, stock price informativeness also have significant impact on the cost of equity capital. In fact, Baker, Stein and Wurgler have put forward this view in 2003, but so far there is no direct empirical evidence. Based on it, in this paper, we examine and analyze the relationship between stock price informativeness and the cost of equity capital of company.In this paper, we expound the relationship between stock price informative-ness and the cost of equity capital based on multiple linear regression model. Using price non-synchronous as a measure of stock price informativeness, and adopt the three-stage residual income model to estimate the cost of equity capital. And then with a sample of 627 A-share listed companies , we establish a multiple regression model after control some variables. Finally, carrying out regression by SPSS. The results of this research shows that there is a significant negative correlation between stock price informativeness and the cost of equity capital. Consistent with the excepted theoretical analysis, increasing the stock price informativeness can reduce the cost of equity capital. Except firm size, the other control variables and cost of equity capital are positive correlation. There is a not significant negative correlation between firm size and cost of equity capital, suggesting that company scale is not clearly reflected. In addition, contrary to expection, the stock's turnover and the cost of equity capital is positively correlated. Perhaps there are many speculative investors in our stock market, leading to failure of liquidity effects.