A Study On Effects Of Implementation Of XBRL Financial Reporting On Cost Of Equity Capital

Today, the world has entered the era of Internet, intellectualization and information; information technology has penetrated in every aspect of economical life. The development of the financial information is a major trend and direction. The previous financial reporting mainly performs by the format of the PDF or WORD, reading and analysis of the information is quite inconvenient, so it can’t meet the requirement of the social development. With the development of information science and technology, the emergence of XBRL technology can effectively make up for the defect of financial reporting; promote the process of financial information’s trend. In the traditional financial reporting application of XBRL technology is a major change. Although introduction of XBRL technology in China is late, the progress and the use of XBRL technology is still very important. XBRL makes market participants lower cost for enterprise’s financial information, and improve the information environment of the enterprise. With the implementation of XBRL the behavior of Equity financing of enterprises is changing, and the implementation of XBRL affect the cost of Equity capital.This paper, based on the research of previous scholars, researches the impact on the implementation of the XBRL financial reporting to the cost of equity capital. This paper analyzes the background of XBRL technology, and expounds its development to improve quality of financial information and significance of enterprise equity financing. Based on the risk control theory, the principal-agent theory, the information asymmetry theory and the cognitive theory as the theoretical basis, supplemented by the representative of the XBRL, equity financing behavior and the content of the financial information quality characteristics of basic, the paper analyzes the advantages and disadvantages of the XBRL financial reporting and traditional financial reporting, and the influence of XBRL to the enterprise’s quality of financial information and the behavior of equity financing.The article uses the model of PEG to calculate the cost of equity capital, and adopts the model of JONES to measure the quality of financial information of enterprises. According to the 2008-year requirement of the SSE, all listed company must submit the financial reporting of XBRL. The article controls some related variables, such as the size of company、financial leverage、MB、the rate of income growth、beta coefficient and listing years of transactions, and make the multivariate linear regression analysis to test the assumptions.The research shows that the implementation of the XBRL financial reporting can effectively reduce the cost of equity capital, and strengthen quality of accounting information to affect the cost of equity capital. The conclusion is helpful to promote the perfection and advance of the theory of XBRL, and have a positive impact for the implementation and application of the XBRL technology in enterprise of our country.