Impact On Cost Of Capital Of Listed Companies' Voluntary Disclosure Of Information

The relationship between Voluntary disclosure and the cost of capital is an attractive and important topic whether in theory or in empirical research. China seems to be particularly suited to identify the impact of voluntary disclosure on a listed company’s cost of capital since the mandatory disclosure level is not high and the listed companies have large space to disclosure information voluntarily.So, the paper selected5years related data of the listed companies in Shenzhen Stock Exchange from2007to2011and then conducted empirical research. Refer to some predecessors’research methods, the paper adopted voluntary disclosure quantity, voluntary disclosure quality, voluntary disclosure channel three aspects to measure voluntary disclosure level. According to relevant theories, voluntary disclosure either reduce the cost of capital or increase the cost of capital. therefore, the paper uses the difference of return on equity and the cost of equity capital by means of the finite three stage residual income valuation model as the dependent variable. Then, I analysis the relationship between voluntary disclosure and the cost of capital.The results show that the dependent variable has both negative number and positive number,which proves voluntary disclosure can either reduce the cost of capital or increase the cost of capital. The results also show a significant positive association between voluntary disclosure level, voluntary disclosure quantity, voluntary disclosure quality and the dependent variable after considering about the company characteristic factors, such as company size and financial leverage. It proves that the higher voluntary disclosure level, voluntary disclosure quantity and voluntary disclosure quality are, the more listed companies’ cost of capital decrease or the less cost of capital increase. However there is no significant association between voluntary disclosure channel and the dependent variable though the relationship is positive.