The Impact Of Investor Relations Managements To The Cost Of Equity Financing

Capital market as a trading platform for investment and financing has been provided for the funding and investors with financial intermediation channels. As more and more investors into the stock market, Issue of securities is becoming an important way of listed companies to raise funds. National regulators in order to ensure the fairness of the securities market and protect investors’ interests, has taken such as compulsory information disclosure means to solve this problem. Listed companies in order to establish a good image in the eyes of investors, stability and expand their investor base, increasing emphasis on the relationship between the investors. In this context, the investor relations management has come into being.Investor Relations Management was initially originated in the1950s, the United States. As China’s securities market started late, we did not introduce the investor relations management until2000, Regulatory authorities hope through the investor relations management, made investors and listed companies strengthen exchanges and communication, help the listed company to establish a good corporate image among investors, At the same time protect investors’interests, establish a mutual trust between investors and listed companies, For listed companies, carrying out the management of investor relations, can establish a good image, consolidate and expand their financing groups, and reduce financing costs, achieve the purpose of improving the corporate governance structure.At present, the research of the management of investor relations in China mainly in the qualitative analysis of investor relations management, few scholars study China’s investor relations management in quantitative way. At the same time, as China’s split share reform has been basically over, In this paper, we combine two aspects of the management of investor relations and equity financing, consider the impact of the cost of equity financing from an investor relationship management, research the investor relations management in the post-equity value of sub-structure reform era.We selected the2008-2009refinancing of listed companies in China’s stock exchanges as the sample to study. First, we use a discounted residual income model to calculate the cost of equity financing in the various samples, then,we quantified the investor relations management level of China’s listed companies calculated the index of investor relations management of listed companies in China and analysis it systematic, Finally, drawing on existing literature for the cost of equity financing, modeling a multiple linear regression model. The major findings of this paper are mainly the following:1, The results of the residual income model shows that the cost of equity financing is generally low in China’s listed companies, each companies’financing cost is much difference and had different financing capacity. The lower cost of equity financing in our country may be due China’s current dividend distribution system.as China’s securities market had not enforced hard constraints on for the dividend distribution, Listed companies can choose the low proportion of the dividend distribution, Such a low dividend policy made the listed companies more willing to choose equity financing, Compared to equity financing and debt financing, there is no fixed dividend burden and does not require due for repayment, Therefore, there is strong preference of equity financing in China’s capital markets.2, By modeling investor relations management evaluation system, we obtained the index of the evaluation of China’s investor relations management level (IRI),we found the investor relations management level in China is generally low, but the investor relations management level showing a rising trend, this indicates that our IRM is constantly developed, in the long run, the listed companies in order to seek long-term support of investors in the enterprise, it is necessary to carry out good management of investor relations.3, We found China’s investor relations management level was negatively correlated with the cost of equity financing, This means that the well of the investor relations management, the lower the cost of equity financing. Therefore, the corporate investor relations management to carry out well, to some extent, reduces the cost of equity financing. In addition, from the investors point of view, investor relations management with the cost of equity financing is a negative correlation, this indicating that at this stage in our stock market investors are to continue to grow and mature, investors have gradually become more rational.Based on the empirical analysis, the author concludes some suggestions:First, listed companies should establish a equity culture of shareholder. Secondly, develop rational investors in our stock market. This requires we establish the concept of "value investing" among investors, Advocating investors concerned about corporate intrinsic value. At the same time, vigorously develop the institutional investors, Made it become an important force in the stock market, this has great guiding significance in guiding the steady development of the securities market and the promotion of rational investment of the investors.