The Empirical Research On The Influence Of Disclosure Quality On The Cost Of Equity Capital

Due to the constant evolution of the investment and financing way, the capital market becomes the main platform of enterprise financing activity. In the capital market, as an extremely important factor, the information will link investors, regulators and other types of roles. The quality of the information will directly decide the capital market resources whether have been effectively allocated, so the information quality must be in the first place. However, the performance of the listed companies in the capital market in our country is dissatisfied, and there is a big problem in public information disclosure. Listed companies are lack of enthusiasm on the issue of disclosure and the information credibility is not high. The cause of the situation should be:management of listed companies exist serious opportunistic behavior and they tend to have some legitimate, improper means to whitewash daily information processing of the company to achieve their intended target. In addition, our country capital market has a certain degree of improvement, investors understand the capital market better and the regulator has also stepped up to the company information disclosure regulation, so investors information disclosure of listed companies also put forward higher requirements, the company reported the information can no longer meet the needs of investors. There is a critical impact on the level of public disclosure of information to investors and the company’s capital market activities, based on this consideration, this paper will carry out a detailed discussion of the relationship between them.This article first briefly introduces the research background, purpose and significance, and then analyzes the special background of China’s securities market and Shenzhen main board. And on the basis of the existing literature from both at home and abroad, information asymmetry and market perspectives on the overall effectiveness of the mechanism of the quality of information disclosure have been elaborated. Through theoretical analysis, we find that improving the quality of earnings information and information disclosure level can effectively solve the problem of information asymmetry, avoid insider "moral hazard" and "adverse selection" of investors and regulate the behavior of the capital market.This article adopts the method of theory combined with empirical analysis. Firstly we expound the concept and evaluation standard of the quality of information disclosure, the connotation and the influence factors of equity capital cost, and then use two types of indicators such as overall information quality and earnings information quality to measure the level of information disclosure. Starting from the authority and availability of data, we choose the information disclosure quality assessment indicators of the listed company in Shenzhen main board to measure the company’s overall quality of information disclosure, and for four grades assigned number4,3,2,1. Then we choose surplus radical degree to measure the surplus disclosure quality and use the extended Jones model to estimate of surplus radical degree and eventually establish two models. Finally, we select Shenzhen motherboard A share listed companies from2008to2010as sample and choose the company scale, financial risk, management risk, beta coefficient, the ratio of book value and market value as control variable, build panel data and make multivariate linear regression. In addition, from a view of looking into the future, we use the PEG ratio method model to calculate the equity capital cost of listed companies. We select470samples data of Shenzhen stock exchange and use SPSS software measurement regression to analyze, finding that overall information quality is negatively related to the equity capital cost and surplus radical degree is positively related to the equity capital cost. On the impact on the equity capital cost, the previous year’s regression coefficient of information disclosure quality is bigger than that of two years or three years ago. The results show that improving the level of information disclosure will help decrease the cost of equity capital, and if the refinancing of the year is closer, the quality of information disclosure will bring more obvious effects on reducing the cost of capital.At the end of the thesis, we point out the limitation of this paper. Our model starts from the microscopic basis, only take corporate governance and financial indicators into account, and do not consider macro-environment factors. Study is limited to the Shenzhen Stock Exchange A share listed companies which have equity financing qualified companies, the empirical results cannot be extended to all the listed companies. Given the importance of information disclosure, we put forward the corresponding policy suggestions, the first is to further improve the information disclosure quality evaluation system of listed company, build a combination of mandatory and voluntary information disclosure system. The second is to strengthen the functions of the organization, form a complete set of internal checks and balances based on the company’s internal governance. The third is to improve the certified public accountants’ practice ability, improve their professional moral level and increase the intensity of punishment for violations of certified public accountants. The forth is to strengthen the investor education, improve the rationality of its investment, and vigorously develop institutional investors.