Research On The Influence Of Corporate Social Responsibility Information Disclosure On The Cost Of Equity Capital

The growth of corporate social responsibility practice has inspired scholars’ enthusiasm for research on corporate social responsibility information disclosure, financing issue has been an important topic in both academia and business circles. Based on stakeholder theory, efficient market theory, cognitive risk theory and theory of asymmetric information, this paper combined normative analysis method and empirical analysis methods, and try to exploring the influence of CSR information disclosure level on costs of equity capital, hoping to make deeper understanding of economic consequences of corporate social responsibility performance.This paper selected samples from companies listed on Shanghai Stock Exchange or Shenzhen Stock Exchange, specifically those had disclosed CSR report from 2008 to 2013. Ultimately, a total of 2410 observations from 636 listed companies were collected. This paper made the use of PEG model and OJN model to measure the cost of equity capital, and adopted the CSR report rating score of Ranking CSR Ratings(RKS) as a measure of CSR information disclosure level. Having controlled factors influencing equity cost, the OLS regression method and random effects regression method were used to make the empirical examination of influence of CSR information disclosure level on equity cost.The paper found that: firstly, higher level of CSR information disclosure can help reducing the investing risk of information asymmetry and cognitive risk faced by investors, thus have a significant negative effect on the cost of equity capital. Secondly, with the introduction of analysts following variables, the empirical analysis showed that the number of analysts following does not have significant effect on the relationship between CSR information disclosure level and the cost of equity capital.