The Attitude And Degree Of Media Reports And The Cost Of Equity Capital

Equity capital cost has always been a hot and difficult issue in the company’s financial theory,and it plays an extremely important role in corporate finance,investment decisions,and corporate valuation.At present,research at home and abroad mainly focuses on the measurement of the cost of equity capital and factors affecting the cost of equity such as company characteristics,corporate governance,and the external environment.Few scholars turn their perspectives into media and study the relationship between attitude and level of media and the company’s equity capital costs.Then,in an economic transition country such as China,can the media’s attitude and level of reporting play a role in corporate governance and effectively reduce the cost of equity capital?Is there an interaction between the attitude and degree of media reporting and the institutional investors’ shareholding on the cost of equity capital?If so,what is the specific interaction?Will the performance be different in different ownership companies?In view of the above-mentioned issues,this paper combines theoretical and empirical tests and conducts a series of studies.Based on information asymmetry theory.principal-agent theory and risk and income equilibrium theory,this paper proceeds from media reporting,an external legal system factor,to theoretically deciding how positive and negative media reports affect the cost of equity capital.This paper distinguishes between different media reporting attitudes and degrees.Taking the 2013 to 2017 Shanghai and Shenzhen A-share non-financial listed companies as the sample population,after a series of sample selection and selection,the final sample of 4,850 listed companies was observed.After controlling a series of factors such as industry and region that may affect the cost of equity capital of the company,empirically test the degree of positive media reports,the degree of negative media reports and the cost of equity capital of the company,as well as the influence of the interaction between the degree of media reporting and the proportion of institutional investors on the cost of equity capital.The research results of this paper show:(1)The positive degree of media reports is negatively related to the company’s cost of equity capital.That is,as the positive degree of media coverage increases,the cost of equity capital decreases,and this effect is only found in non-state listed companies.(2)There was a significant negative correlation between the negative degree of media reports and the cost of equity capital of the company.That is,as the negative degree of media reports increased,the cost of equity capital decreased.This effect only exists in non-state listed companies.(3)Among non-state listed companies,the sensitivity of investors to the target company’s media reporting is more sensitive,and the degree of negative media reports is more effective.(4)The increase in the proportion of institutional investors holding shares will increase the negative correlation between the positive degree of media reporting and the cost of equity capital.And this effect exists only in non-state listed companies.(5)The increase in the proportion of institutional investors holding shares will increase the negative correlation between the negative degree of media reports and the cost of equity capital.And this effect exists only in non-state listed companies.The innovation of this paper is distinguishing the media’s attitude and level,and studying more closely about the relationship between positive and negative media reports and the cost of equity capital,and about the different attitudes and levels of media reports related to the cost of equity capital,and about the influence of the shares held by institutional investors and the nature of the company’s ownership.The modern financial theory system is enriched because of that.Under the current background that a large number of high-quality listed company resources in China are flowing into the financing of European and American capital markets,effectively reducing the financing costs of listed companies to attract companies to list and finance domestically has become an issue that China’s capital market management authorities urgently need to solve.This article combines some problems still existing in China’s media market and capital market,and puts forward some conclusions and recommendations.To a certain extent,it contributes to the healthy development of the capital market and seeks to find some institutional factors that reduce the financing costs of listed companies.