Study On The Relationship Between Non-Financial Information Disclosure And The Cost Of Equity Capital

Modern economics has proved that information effectiveness have an important impact on the economic operation. The society has reach a consensus that in order to protect the interests of investors and other stakeholders, enterprises should disclose financial information fully. In recent years, no matter in our country or abroad, in theory or practice,the role of non-financial information has become more and more important. As a beneficial supplement of financial report, non-financial information has received wide recognition. Non-financial information disclosure can be divided into three parts:annual disclosure, daily disclosure and temporary disclosure. The way of annual disclosure is social responsibility report (CSR reports), which is the main way of non-financial information disclosure. We do the research based on the information economics theory, legitimacy theory and stakeholder theory. From the theoretical analysis, we can see that the improvement of information disclosure can reduce the information asymmetry, and avoid administrators "moral hazard" and "adverse selection"; can make the enterprise management behavior satisfies the requirement of legality; can protect the interests of stakeholders.Through the existing research results, we can see that the improvement of information disclosure can reduce information asymmetry, attract more investors, stock trading become frequent, then the cost of capital will be reduced. In our country capital market, about whether this conclusion is suitable, scholars have done some related research, although the conclusion of each other is not the same, but the mainstream point of view is that they have negative correlation. However, most researches treat non-financial information disclosure as exogenous variables, endogenous problems have been ignored. Depended on our country capital market, from two different appoint:exogenous and endogenous, we carry on our research.Through the review and reference of both domestic and foreign related research, we introduce the concept of non-financial information disclosure and the cost of equity capital. Then list explanatory variable, control variable and explained variable, give our hypothesis and set up the models. In this article,we select companies that publish CSR report (non-financial information disclosure carrier)from 2009 to 2011 in SSE(Shanghai Stock Exchange) and SZSE (Shenzhen Stock Exchange)as research samples, In the empirical analysis, we use Ordinary Least Squares(OLS) method and Two-stage Least Square (2SLS) method, from the comparative analysis, we can conclude that the correlation between non-financial information disclosure and the cost of equity capital is negative. In our study, we use Rankins CSR Ratings(RKS) score as a measure of the non-financial information disclosure level, using PEG model to estimate the cost of equity capital.The specific research results including:(1) The improvement of Non-financial information disclosure level can effectively reduce the cost of equity capital. (2) The area that corporation located has influence to the negative correlation.