Financing Constraints,Equity Characteristics And Corporate Capital Costs

Capital cost is a core concept in financial theory.From a macro perspective,capital cost is an important indicator to consider the development of the capital market,and plays a key role in the allocation of market resources and the guidance of capital flow.From a micro perspective,capital costs are permeated in various decisions in business management.Whether it is strategic management,capital structure,resource allocation,investment and financing decisions,it should be subject to capital costs.There are many factors affecting the cost of capital of enterprises.As a common problem faced by enterprises in the process of production and operation,financing constraints will also affect the cost of capital of enterprises.This paper,based on data of A-share listed company in Shanghai and Shenzhen in 2008-2017,studies the relationship between financing constraints and corporate capital costs.Considering that capital cost is divided into equity capital cost and debt capital cost according to different financing methods,this paper studies the relationship between financing constraints and equity capital cost and debt capital cost.Further,this paper discusses the impact of financing constraints on corporate capital costs from the perspective of equity characteristics(property rights,equity concentration,institutional investors).Through empirical evidence,this paper draws the following conclusions:1.There is a significant positive correlation between financing constraints and corporate capital costs(weighted average cost of capital,cost of equity capital,cost of debt capital),that is,the greater the financing constraint,the greater the capital cost of the enterprise.2.Whether it is a state-owned enterprise or a non-state-owned enterprise,the higher the financing constraint,the higher the capital cost of the enterprise.In addition,the difference of the financing constraint coefficient in the group regression is tested by the seemingly no correlation model.Only when the explanatory variable is the debt capital cost,the p value is less than 0.1,and the regression coefficient of the financing constraint is significantly different.3.Equity concentration has a negative adjustment between financing constraints and corporate capital costs(weighted average cost of capital,debt capital costs);there is no adjustment between financing constraints and equity capital costs.4.Overall,institutional investors have no adjustment between financing constraints and corporate capital costs.Institutional investors are divided into pressure-resistant institutional investors and pressure-sensitive institutional investors.It is found that pressure-resisting institutional investors have a negative adjustment effect on the relationship between the two,while pressure-sensitive institutional investors have a positive regulation between the two.Based on the above conclusions,this paper puts forward the following suggestions on how to better reduce the cost of capital of enterprises and promote effective investment of enterprises:First,enterprises should reduce their own degree of financing constraints.Second,the government should speed up the reform of China's economic system,no longer interfere with the company's business decisions,and no longer act as a state-owned enterprise insurance company.Then,companies should optimize equity settings,reduce agency costs,and alleviate information asymmetry,thereby increasing company value.Finally,optimize the institutional investor shareholding structure,introduce funds and other pressure-resistant institutional investors,encourage institutional investors to hold shares for a long time,and participate in corporate governance.