The Empirical Research On China’s Listed Companies’ Information Disclosure Transparency Impact The Cost Of Equity Capital

The capital market is a market of flows of information and capital, and capitalmarkets heavily rely on information, the information is a hub connecting thetransactions of capital market. The information has played a pivotal role in the capitalmarket. Full disclosure of information is the effective guarantee of the capital market.Timely, full and true disclosure of information is able to protect the interests ofinvestors and creditors. In addition, supervision and evaluation from the governmentsector are inseparable from the enterprise corporate disclosure information. Therefore,the public is extremely concerned about the information disclosure. Improving theinformation of listed companies to disclose has practical significance to protectinterests of small investors and creditors and improve the corporate governancestructure and improve the efficiency of capital markets. The research aboutinformation disclosure affecting the cost of capital has become the research focus ofthe community and scholars in the field.The thesis investigates China’s listed companies’ information disclosure of theimpact of transparency on the cost of equity capital through selecting A-share listedcompanies of Shenzhen board market from 2008 to 2010 year as our sample, andusing approach of the historical average income to measure the cost of capital andearnings radical degree to weigh disclosure transparency, and selecting four aspects ofsize of the company, financial risk, corporate governance structure and the carryingamount of market capitalization ratio as control variables. The thesis reviewed relatedliterature about information disclosure of the impact of transparency on the cost ofequity capital. We found that increasing information disclosure could reduce the costof equity capital in the A-share listed companies of Shenzhen board market bymultiple regression analysis. Addition, the company size, board size, proportion ofindependent directors, as well as the carrying amount of market value were inverselyproportional relationship with the cost of equity capital, but financial risks and the topfive shareholders ownership percentage were directly proportional relationship on thecost of equity capital. Based on these findings, this paper proposes several policyrecommendations, and described the limitations and shortcomings of the study.