The Impact Of Corporate Social Responsibility Information Disclosure On The Cost Of Capital: The Empirical Research

In recent years, as the problem of environmental pollution, product qualitysecurity, and employees’ rights damaged increasingly, corporate social responsibilitygradually go into the views of enterprises, government, media and social public, it hasbecome a topic of enterprise competitiveness and sustainable development. Domesticgovernment departments have introduced all kinds of documents and policy toadvocate enterprises to perform social responsibility and disclose the information ofsocial responsibility. The study of corporate social responsibility informationdisclosure has been a hot issue in research field. But the current situation of socialresponsibility fulfillment as well as information disclosure in domestic enterprises isworrying, which means the practice circle still have doubts about the economicconsequences of corporate social responsibility information disclosure. Therefore, thestudy on this topic has theoretical value and practical significance. We can not onlyobtain the further empirical evidence about the relationship between corporate socialresponsibility information disclosure and corporate value, but also promote theenterprises bear the social responsibility and regulate social responsibility informationdisclosure system.This paper regards the social responsibility information disclosure as the theme,the cost of capital as the foothold, examines the disclosure of social responsibilityinformation whether affects enterprise value by reducing the cost of capital or not.Based on reviewing a number of literature and relevant theory, this paper supposes that,the higher level of corporate social responsibility information disclosure, the lower ofthe capital cost. Using the social responsibility report rating scores of listed A-sharefirms from2009to2011, this study examines how the social responsibility informationdisclosure impacts the cost of capital. We found that there is a negative correlationbetween corporate social responsibility information disclosure and the cost of capital,whereas this relationship is not obvious for the cost of bank loans under thebackground of China’s capital market. The further research also shows that thedisclosure of social responsibility information plays an important role on creatingenterprise value by reducing the cost of capital. The findings of our research will havesome policy implications for relevant regulators, academic and practice field.