Research On Impact Of Supply Chain Integration On The Cost Of Equity Capital

The core of supply chain management is supply chain integration.Supply chain integration(SCI)is paid more and more attentions on by theorists and practitioners due to the characteristic of high efficiency and strong link.It is considered as the key to the success of enterprises.Supply chain integration is a company's strategic integration for suppliers and customers' internal and external management processes,so as to achieve efficient low-cost communication of products,services,information,capital and decisions.Enterprise must have sufficient funds to ensure its sustainable,healthy operation and development.Cost of capital mainly refers to compensation for the money owners about using the money.The cost of capital is not only the critical benchmark of enterprises' capital efficiency,but also the important basis for financing decisions and important standard when choosing investment projects.The cost of equity capital is the price paid by the enterprise through the issuance of shares,and also the necessary payment for investors.In this way,it is vital for both the enterprises and the investors to have a great command of the cost of equity capital.In business practice,the cost of equity capital of an enterprise is influenced by the risk of its operation style and environment.When the supply chain integration is too high,the supply chain integration will,on the one hand,set up a closer strategic cooperation relationship with upstream and downstream over the supply chain.In this way,it will reduce the middle transaction cost and finally reduce the enterprise cost of equity capital.On the other hand,core enterprise' dependence on suppliers and customers will,in turn,increase the bargaining power of suppliers and customers,which may reduce the bargaining power of the core enterprise for external stakeholders.Bargaining power will significantly influence the core enterprise of environmental risk degree,and affect investors' necessary return rate,namely the equity capital cost.Problems of how the supply chain integration affect the equity capital cost,if there are any other factors that affect this relationship and what the mechanism is of the relationship between supply chain integration to enterprise equity capital cost is the main topics we will discuss as follows.Based on the Chinese manufacturing A-share listing corporation 2009-2016,this paper finds that supply chain integration is negative related to the cost of equity capital,but the relationship exists only when the environment uncertainty is relatively lower.Operation risks play mediating effects between the relationship of supply chain integration and the cost of equity capital.Results show that under the specific market environment in China,supply chain integration decreases the cost of equity capital by approaches on improving the enterprise operating performance and the risks faced by the enterprises.However,due to the environment uncertainty,the correlation between supply chain integration and the cost of equity capital is heterogeneous.In addition,this paper studies the operation risks as a mediator between supply chain integration and equity capital cost relationship.Based on the above research,this paper puts forward the following suggestions :(1)Enterprises can reduce the cost of equity capital through the perspective of supply chain integration.(2)Enterprise management should pay attention to the large customer risk of high environmental uncertainty and raise enterprise risk awareness.(3)Government and other regulatory authorities should actively encourage enterprises to disclose accounting information accurately about the supply chain.