Heterogeneity Of Institutional Investors, Information Disclosure Quality And Equity Capital Cost

Accounting information is the state of listed companies. It mainly reflected the level of effective degree of capital market, and the social resources allocation efficiency. Of course, the full disclosure of accounting information will reduce the transaction costs. The theoretical and empirical studies in western countries shows that the big ability of information disclosure can reduce the information asymmetry between managers and investors and among investors, and reduce investor’s risk and enhance the stock liquidity, which can reduce the fee of equity capital. Institutional investors is a new company’s governance force. mechanism. Foreign scholars’ study shows that institutional investors behavior can reduce the effects of information disclosure on equity capital cost. On the one hand, institutional investors, contrast to the other investors, their search for private information and operations can enhance the value of the information value of the stock, and enhance market efficiency. On the other hand, Institutional investors with its capital scale and professional advantage can help to reduce the monitoring cost of agent, obtain a bigger benefit and reduce agency costs. But the above research are given in developed countries of ripe securities market environment on the basis of, lack of deeper research about emerging market’s information disclosure quality on the cost of equity capital.Therefore, in this paper, on the basis of the review of domestic and foreign literature, we choose Shenzhen stock exchange main board listed non-financial companies in 2008—2011 observational data as sample to discusses specific securities market environment in our country, whether promoting information published condition will help to decrease listed companies’ cost of the equity capital, and what extent reduce the equity capital cost? This paper also studied that institutional investors holding, the size of holding stocks and different types adjust on the relationship between them. This article chooses the PEG model to calculate the equity capital cost. Based on the authority of the data and procurement, issued evaluation results as alternative variable of disclosure quality, according to the order from low to high are successively set numerical value 1, 2, 3, 4. Under the control of the firm growth, firm scale, financial risk, management risk etc.. The study found that:(1) In the Shenzhen stock exchange main board market, the quality of information disclosure is also the important factors influencing the company’s equity capital cost, higher quality of information disclosure of companies, its cost of equity capital will lower.(2) Compared with no institutional investor shareholding company, in the institutional investors holding company, higher quality of information disclosure has less effect on the equity capital cost.(3) Institutional investors holding size will adjust the relationship between information disclosure and the cost of capital, specifically, the company which has the higher size of the institutional investor, information disclosure quality on the influence of the equity capital cost is smaller.(4) The adjustment role of the two different types of institutional investors has significant difference. The institutional investors depended on company’s business did not significantly adjusting action, and the institutional investors existing only investment relationship with the company have significantly adjusting action. That is to say if higher proportion of dependent institutional investor, information disclosure quality on the influence of the equity capital cost is smaller.To sum up, the author points out some policy comments :(1) To improve the quality of information disclosure should start from the laws and regulations and elaborate the relevant standards. At present in our country under the condition of institutional investors’ low shareholding, improving the quality of information disclosure to reduce the cost of capital, still has important meaning to improve the financing efficiency.(2) Create necessary conditions to play a more effective role for institutional investors. The actual ownership structure in our country, a relatively small proportion of institutional investor ownership, cause that our country existing institutional investors participating in corporate governance and monitoring the operation of the listed company role is very limited. Referred on the experience of the development of institutional investors in the United States, to make institutional investors to play a more effective role on corporate governance and capital market’s stable development, need to have some necessary conditions. One of the most important thing is to reason ownership structure.(3) Pay attention to cultivating relatively independent institutional investor, forming reasonable structure of investors.