The Impact Of Risk Bearing On The Cost Of Equity Capital

Capital cost is an important reference condition for a company to make financi ng decisions and optimize its capital structure.It is also the basis of investment an d profit distribution.As listed companies mainly use equity financing to raise funds,controlling the cost of equity capital is particularly important for listed companies.As an important means of risk management,risk-taking is of great significance to corporate governance and operation,and has a significant impact on determining the scale of investment and controlling the cost of equity capital.Nowadays,China’s e conomic reform is deepening step by step,and many governance policies have been issued.The Ministry of Finance has indicated that China will adopt a more active fiscal policy to reduce taxes and fees on a larger scale in 2019.Does this mean t hat the stock market as an economic indicator will also usher in a new round of p olicy adjustments? Based on the dividend tax policy reforms issued by the state tw o times before,this paper systematically studies the impact of risk-taking on the co st of equity capital of Listed Companies in China,and makes relevant analysis on the specific role of the dividend tax reform policy,so that companies can arrange i nvestment funds more accurately and promote the healthy development of the comp any considering the factors of risk-taking and cost of equity capital scale.The contents of this article mainly include: the background of the research and the problems encountered,the review of basic economic theory and previous literat ure,the demonstration hypothesis and empirical test of the impact of risk-taking on the cost of corporate equity capital,etc.Based on the analysis of previous scholar s’ research conclusions and the two dividend tax policy reforms in China,starting with the characteristics of corporate risk-taking and equity capital cost,this paper fi rst gives a brief introduction to the research background of the subject and puts for ward the problems that need to be solved.Then it explains the significance of the study from both theoretical and practical levels,and lists the structure and research methods of the article.The innovations in this project.Secondly,this paper collec ts and collates the basic theories and domestic and foreign literatures related to risk-taking,investment scale and tax policy affecting the cost of equity capital,laying a theoretical foundation for the next research,and then puts forward the research h ypothesis on the basis of summarizing the literature conclusions and theoretical anal ysis.Thirdly,we use the financial data of listed companies from 2002 to 2014 to t est the hypothesis.Finally,this paper summarizes the research results and gives rea sonable suggestions from the perspective of the governments,companies and investo rs according to the research conclusions.It also summarizes the limitations of the r esearch and puts forward expectations for the follow-up study.Through rigorous theoretical analysis and scientific empirical tests,the followin g two conclusions are drawn:(1)Risk bearing under the two dividend and tax refo rm policies,the impact on the company’s equity capital cost is the same,which inc reases the company’s equity capital cost.(2)The reform of dividend tax policy has weakened the positive impact of risk taking on the cost of equity capital of the c ompany.The conclusion of this paper can provide some enlightenment to the gover nment in formulating macroeconomic policies and investment decisions of listed co mpanies and investors,and also enrich the research content of the cost of equity ca pital.