A Research In The Effect Of The Listed Companies' Earnings Disclosure Quality On The Cost Of Equity And Debt Financing

Information disclosure of listed companies on the capital market efficiency is essential. In the modern society, the information as an important economic resource, which is subject to the stock market has always attached great importance to various types of participants. In recent years, the problem of accounting information by more and more attention, growing incidence of false accounting information, not only damages the interests of various investors, also destroys the order of China's securities market. Therefore, how to standardize and improve the information disclosure of listed companies'accounting system, improve the quality of information disclosure, become an important issue that we solved.In this paper, between 2005-2008, Shanghai and Shenzhen A-share listed companies comply with conditions of equity refinancing of listed companies as samples of the research on the relationship between the quality of earnings disclosure and the cost of equity financing and debt financing ,which is to expose our accounting information disclosure of listed companies, which reveals the main factors of the cost of equity financing and debt financing , to guide the company to enhance their disclosed earnings quality ,in order to find the effective way of lowering the companies'financing cost ,to improve efficiency of the corporate finance. The cost of equity is calculated by residual income model GEB, and the cost of debt is calculated by the formula that can be signaled as (interest expenses plus capitalized interest) / average total liabilities in one year. Besides, with the modified Jones model to calculate EM to measure the disclosure quality of earnings. After controlling of theβcoefficient, company size, book value ratio, leverage ratio, asset turnover, return on assets, ownership concentration, interest coverage ratio, the main business revenue growth, debt structure, and industry type and other factors, we test as follow :①the research on the relationship between the quality of earnings disclosure and the cost of equity financing and debt financing when the listed companies overstate or reduce the earnings;②using a linear regression model to test the relationship between the quality of earnings disclosure and the cost of equity financing and debt financing;③establishing a selection model, introducing a dummy variable and a interacted variable with the earnings disclosure quality to test the relationship between the quality of earnings disclosure and the cost of equity financing and debt financing .The results showed that the higher the quality of public disclosure of corporate earnings, the lower its cost of equity financing and debt financing costs; the impact of earnings disclosure quality on the cost of equity financing is greater than the cost of debt financing, which means that with respect to creditors , the shareholders are more dependent on the quality of earnings disclosure and give more concern on it .Therefore ,only if protecting shareholder's enthusiasm and initiative, can listed companies reduce the financing costs so that it can improve their financial efficiency.