Corporate Governance,Cost Of Equity Capital And Investment Efficiency

Investment decision in the enterprise's three major financial decisions play the top role,but in modern companies due to information asymmetry,investors and managers of the interests of inconsistencies and other reasons,the enterprise's investment decision-making has been a certain impact,so that enterprises have investment Lack of investment and excessive investment phenomenon,how to suppress the occurrence of this phenomenon has been the academic and theoretical research hot spots.Good corporate governance can improve the company's investment efficiency by reducing the asymmetry of information between business management and investors,mitigating the interests of investors and management,etc.,but what is the way in which corporate governance affects investment Efficiency,this article to study this.Based on the theory of intermediary effect,this paper explores the relationship between the level of corporate governance and the efficiency of investment and the role of cost of equity capital in the construction of the corporate governance composite index.This paper uses the methods of empirical research to study the relationship between the level of corporate governance and the efficiency of investment,the relationship between the level of corporate governance and cost of equity capital and the cost of equity capita playing a role between the level of corporate governance and the efficiency of investment through three models.Specifically,firstly,construct corporate governance composite index G indicators,and make it as the main explanatory variables;Secondly,in terms of investment efficiency,the Richardson model is used to measure the investment efficiency of the firm,and the absolute value of the residuals is used as measuring the standard of inefficient investment.The absolute value of the residual is used as the explanatory variable;Thirdly,using the mean of CAPM model and FF model as the cost of equity capital and the cost of equity capital obtained as the explanatory variable to study the correlation between the level of corporate governance and cost of equity capital,and further explore the cost of equity capital as mediation variable playingthe role between the comprehensive level of corporate governance and investment efficiency;Finally,the relevant variables are controlled in each model.In the specific empirical operation,this paper firstly analyzes the 11 variables that represent the level of corporate governance,expounds the specific practices of the principal component analysis,and carries out descriptive statistics on 11 indicators,and further analyzes the current situation of Chinese listed companies;then the variables in the Richardson model are descriptive statistics,and briefly analyze the investment level of our company.Secondly,the correlation between the comprehensive index of corporate governance and cost of equity capital are analyzed,the correlation between the comprehensive index of corporate governance and investment efficiency model are analyzed,which shows that the selected control variable is desirable.Thirdly,the empirical analysis of the three models shows that the comprehensive index of corporate governance and investment efficiency are positive correlation,Corporate governance indicators and cost of equity capital are negatively correlation,Cost of equity capital plays a part of the intermediary effect relationship between the comprehensive index of corporate governance and the efficiency of investment;Finally,the cost of equity capital is re-estimated,and as a basis for the empirical test,the results are the same as before,It is show the previous conclusions are robust,through the robustness of the test.In the end of this paper,the relevant suggestions are put forward: enterprises should improve the level of corporate governance,pay attention to the company's equity capital costs,establish a sound decision-making system.Because of limited ability,the selection of corporate governance indicators may not be able to include all aspects of the company,and this paper does not take into account the role of debt capital costs,may have a certain impact on the results,which is the shortcomings of this article.