Study On The Influence Of Corporate Social Responsibility Information Disclosure On The Cost Of Equity Capital

The corporate information disclosure has an important influence on the cost ofequity capital. High-quality information disclosure can reduce information asymmetrybetween investors and firms，improve stock liq’uidity and reduce investors riskestimation and required rate of return, thus reducing the cost of equity capital. In thetrend of globalization of corporate social responsibility, investors are increasinglyconcerned about the implementation of corporate social responsibility to reduce theirinvestment risk. As a rational market entity, firms are adequately motivated to meetthe information needs of investors by social responsibility information disclosure,thereby reducing the cost of equity capital. Therefore，it has important theoretical andpractical significance to do the theoretical analysis and empirical test of thecorrelation between corporate social responsibility information disclosure and thecost of the cost of equity capital with the data from China’s capital market.Based on efficient market hypothesis, asymmetric information theory,stakeholder theory and t liquidity premium theory, the article makes empirical tests onthe influence of corporate social responsibility information disclosure quality on thecost of equity capital. The test selects2008-2011A-share listed companies whichhave social responsibility rating reports by independent third party, Rankins CSRRatings, as the primary sample. The study find for China’s listed companies andenvironment-sensitive firms，social responsibility information disclosure reduce thecost of equity capital, but not very significant. For consumer-sensitive firms，corporate social responsibility information disclosure significantly reduces the cost ofequity capital. According to the results, in order to promote corporate socialresponsibility information disclosure playing its proper role in capital market, thepaper provides some policy recommendations to improve the corporate socialresponsibility information disclosure system through improving informationdisclosure regulations, strengthening supervision mechanism，establishing incentivesmechanism and building evaluation index system of corporate social responsibility.