Influence Of Renewable Energy Law On The Correlation Between Social Responsibility Of New Energy Corporate And Cost Of Capital

While facing with many problems brought by rapid economic development, social responsibility has become an obligation of the enterprise. Now, with the rapid develop ment of new energy sources, the new energy companies need to focus on social responsibility. But whether it is beneficial for companies to invest in social responsibility would still have no unified conclusion. New energy enterprises in our country are still in the growth stage, with low market share and slow growth, but they have great potential for development which brings them the hot attention. As the new energy enterprise have the capital- intensive feature in the early stages of growth, we need to inject huge amounts of money to support its research and development of technology and expansion of size. This determines the financing features of new energy companies are large financing needs, long financial returns and high risk. Therefore, we need considered financial issues of new energy corporate together with social responsibility, provide a new approach to the development of financing. In the case of a large number of traditional energy consumption which leads to serious environmental degradation and resource depletion, C hina promulgated the first law on renewable energy, "Renewable Energy Law of People’s Republic of China", focusing on the promotion of market players to develop renewable energy resources, in order to build sustainable develop society with clean resources and good ecological environment. In view of the important significance of the new regulations on new energy companies, after exploring the relationship between social responsibility of new energy companies and the cost of capital, it is necessary to focus on how the legislation enacted impact the relationship between the two.In this paper, we use new energy enterprises as the research object, to investigate the effect socially responsible behavior of new energy companies on its cost of capital(including the cost of equity and cost of debt capital), further to explore the impact of " Renewable Energy Law of People’s Republic of C hina " on the relationship between social responsibility of new energy corporate a nd the cost of capital. Through the empirical results, we obtained that the Renewable Energy Law is mainly through the two ways to promote negative relationship between social responsibility of new energy corporate and the cost of financing: reducing financing costs by reducing investment risk, and improving their sense of social responsibility to promote the new energy enterprises to fulfill their social responsibility. At the same time, we draw a conclusion that Renewable Energy Law does not encourage financial institutions to attach importance to the social responsibility performance of new energy corporate, which seriously affect the enthusiasm of new energy corporate to fulfill social responsibility.In this paper, through an innovative way, we explore whether the Renewable Energy Law promulgated by the state enhance financial performance of new energy companies through the influence on the relationship between social responsibility and the cost of capital. Focus is the role of the Renewable Energy Law on the relationship between social responsibility of new energy corporate and the cost of capital. Meanwhile, we divided the cost of capital into equity and debt, separately test the role which new energy enterprises actively fulfill their social responsibility on enterprise value. Finally, we propose the new energy enterprises to use positive impact on the relationship between social responsibility and the cost of capital which given by the national policies rationally and efficiently. The new energy enterprises should make efforts to fufill social responsibility, in order to achieve the purpose of financing a lower cost of funds for sustainable development.