Research On The Impact Of Audit Quality On The Cost Of Equity Capital Of Listed Companies

The cost of equity capital is the price that the enterprise needs to pay for the financing of the capital market,and it is also the necessary reward for the investors to pay the capital.Therefore,the cost of equity capital is very important for both enterprises and investors.By issuing shares in capital market,financing has the advantages of large financing scale,limited constraints and small risks,so most enterprises in practice adopt this kind of financing method.Theory study has found there are a lot of influence factors of equity capital cost,which can be roughly divided into external factors and internal factors of two parts.Internal factors include the size and nature of property rights,management,and financial risk,profitability,etc..The external factors include systemic risks,industry characteristics,market regulations and other factors.As an important institution to supervise the operation of the company in the capital market,the independent auditing system of accounting firms will have an important influence on the cost of equity capital of listed companies.From the subsequent economic effects of audit quality,the study has found that high quality audit can ensure the quality of accounting information of listed companies,and reduce the risk of the investment,so investors' required return on investment will reduce.It also leads to the equity capital cost reducing,thus putting forward the improvement of certified public accountants audit quality can reduce the listed companies' equity capital cost hypothesis.The selection of China's 323 a-share listed companies in 2013-2015 as the research samples,in terms of measuring company' s equity capital cost,the 0J model of few constraints is used.The audit quality is measured from two indicators-the surplus quality and accounting firm scale,and the hypothesis is tested empirically.The conclusions can be drawn through theoretical analysis and empirical tests.First,high quality of independent audit can reduce the cost of equity capital of listed companies,which means certified public accountants independent auditing system in capital market fully play a role in the information of verification and supervision.And the certified public accountants audit has economic value;Second,the smaller the size of the company is,the bigger the impact of the increase of the auditing quality on reducing the cost of equity capital is.Research on the influence factors of equity capital cost research literature is expanded.Establishing contacts with the audit market,capital market can arouse the attention of the society from all walks of life for the firm's audit,which can supervise and urge firms to improve audit quality.And it has a positive significance for the establishmen of the audit quality standards.