A Research On The Environmental Information Disclosure Impact On Financing Costs

In recent years, environmental issues are increasingly becoming one of the hot topic of social relations. Situation of environmental pollution is getting worse. As to the level of listed companies, their environmental events occurred endlessly, and these sudden environmental events also give investors a lot of uncertain risk and unpredictable losses. Stakeholders in all aspects of society hold increasing requirement for environmental information disclosure’s quality. The improvement of listed companies’ environmental information disclosure level can both effectively meet the internal and external investors’ demand for environmental information and improve the company’s public image for the company, which also have a profound impact on company’s equity and debt financing. Meanwhile, the Central Area, as a major industrial enterprises’ region only second to the Northeast region, some provinces and cities has many polluting enterprises and the industry concentration is greater. So the study is of great importance to the central region listed companies’ information disclosure decision.Firstly, the domestic and foreign scholars’ literature about the conventional relationship between them are systematically reviewed, then the concept of environmental information disclosure and financing costs are separately defined and measured, meanwhile, the theoretical basis between environmental disclosure and financing costs management are introduced. Based on the literature review and theory, we put forward three hypotheses and model. Assumption 1 thinks that the higher the quality of environmental information disclosure, the lower the cost of equity capital and it is assumed in 2 that the higher environmental information disclosure quality, the lower the cost of debt financing. The third assumption believes that the environmental information disclosure’s impact on the cost of equity financing is greater than the that of debt financing. In this paper, filtered listed companies in 2014 of the central region as samples, we build the company’s environmental disclosure index system according to the index analysis method, and we measure the size of equity and debt financing costs using the capital asset pricing model(CAPM) and other models to hypothesize and test from two aspects in control of a series of variables. On the one hand, empirical analysis on the quality of environmental information disclosure’s affecting on the cost of equity financing and debt financing costs is made by using regression models; on the other hand, we establish a selection model and introduce the variables interact with dummy variables and to verify the environmental information disclosure quality effect on debt and equity financing costs’ differences.After empirical research, this paper concludes that environmental disclosure quality is a significant negative correlation to equity financing costs which shows that environmental information disclosure quality’s improvement can effectively reduce the cost of equity financing; environmental information disclosure quality is a significant negative correlation to debt financing costs, which shows that a full disclosure of environmental information is one of the factors creditor investment decisions. A higher the quality of environmental information disclosure means equity and debt financing costs are lower. The verification to the degree of differences’ failure means that the environmental information disclosure quality effect on debt financing costs is greater than the impact on equity financing costs. This shows that with respect to the shareholders, creditors hold greater attention to environmental information disclosure and their investment decisions depend more on environmental information disclosure. It concludes with recommendations based on the conclusions: to further improve the environmental information disclosure system, strengthen the supervision of environmental information disclosure; improve the listed companies’ environmental information disclosure motivation, rich the details of environmental information disclosure; to focus on the protection of the interests of creditors, and improve investment enthusiasm of creditors.