Study On Economic Consequences Of Listed Companies’s Information Transparency

Since the21st century, financial fraud and disclosure fraud scandal, as well asthe "subprime crisis" occurred make transparency of listed companies become thefocus of capital market. Regulating information disclosure of listed companies andimproving the transparency of information is not only the basic requirement ofinvestor protection and security regulation, but also is the prerequisite for the stableand healthy development of economic and capital market. The "informationtransparency" has caused widespread concern in the academic area, and consequencesof improving information transparency of listed companies has great significance bothfor listed companies, outside investors and the capital market.The paper selects two aspects of the economic consequences as the study objectwhich are the cost of equity capital and business performance. Firstly, the paperelaborates the research background of economic consequences of listed companiesinformation transparency, then it describes the purpose, ideas and methods, contentand framework of the study, other than that, it reviews the literature about the impactof information transparency on the cost of equity capital and business performance,then it discusses the theoretical basis and institutional context of listed companiesinformation transparency of economic consequences.The paper selects the evaluation results of information disclosure by ShenzhenStock Exchange as a proxy variable of information transparency, then the empiricalresearch investigates the impact on cost of equity capital and business performance.The paper calculates the cost of equity capital using the OJ model, and measuresbusiness performance with the overall performance score which calculates with themethod of principal component analysis.Through theoretical and empirical analysis, the paper concluded that:Firstly,information transparency has significantly negative correlation with cost of equitycapita listed which calculates with0J model, it means that the higher the informationtransparency of listed companies, the lower its cost of equity capital; secondly, theattribute of ultimate controller would restrict the impact of information transparencyon the cost of equity capital, information transparency has significant influence on thecost of equity capital of both state-owned company and non-state-owned company,but the impact on non-state-owned company is more significant; thirdly, informationtransparency of listed companies has a significant positive correlation with business performance which measures with the overall performance scores, it means that thehigher of the information transparency, the better of the business performance of thelisted company.Based on the study, the paper suggests that listed companies should furtherimprove the information transparency, and make relevant policy recommendationsfrom the aspects of listed companies and securities regulation.