Relevance Research Between Ratio Of The Debt Financing Cost,Solvency Index And Fluctuation Of Stock Price

The accounting index in annual report of Listed Companies is an important way for investors to understand the performance and development of listed companies.Profitability index can be quickly reflected in the stock price,while the debt financing cost and solvency index need longer time to be reflected in the stock price and did not receive enough attention,because they have relatively longer influence on stock price.On the other hand,the debt financing cost and solvency index is very important for company’s longterm business development.This study attempts to analyze the relationship between the debt financing cost,solvency index and stock prices,to improve the relationship between financial index and stock prices,and to provide empirical research support for capital market investors’ decision.This paper uses empirical research methods on association between interest expense interest bearing debt ratio in China’s securities market in different sectors during 2011-2015 years with the stock price changes as well as relationship between EBITDA interest expense ratio and changes of stock prices.Through the empirical study,this paper finds out that both the correlation between interest expense interest bearing debt ratio with the change of stock price,and the correlation between EBITDA interest expense ratio and stock price change of one year are relatively weak.However,there is a significant correlation in those two index of five years.The results show that,five-year weighted stock price growth rate will be higher when its interest expense interest bearing debt ratio is higher or when EBITDA interest expense is lower.The study gives an in-depth analysis on the relationship between debt financing cost,debt paying ability and stock price of listed companies in China,and completes the influence factors of financial indicators on stock prices in capital market of China’s listed companies.Therefore,the research results have a certain practical significance for investors in the capital market.