The Impact Of Corporate Asset Liquidity On Corporate Cost Of Capital

At present,corporate asset liquidity has become one of the hot issues in corporate financial research.The cost of capital is the core issue in the study of securities investment and asset pricing.However,there are few studies on how the cost of capital is affected by the liquidity of corporate assets.Discussing the impact of corporate asset liquidity on capital cost can not only enrich the research contents of both,but also have important guiding significance for corporate financing and investment decision-making of investors.The liquidity of the assets of the company is related to the solvency and operating ability of the company,which in turn affects the financing ability and cost of the company.When the liquidity of the company's assets is insufficient,it will reduce the operating flexibility of the company,increase the operating risk of the company,affect the profitability of the company,and easily lead the company into high-risk and low-yield dilemma,which will further lead to the financial risk,thus reducing the probability of the company obtaining external financing.At this time,in order to raise enough funds,the company must raise the cost of financing.It can be seen that there is a certain relationship between asset liquidity and capital cost.Moreover,in the current market economy environment of our country,inventory overstock,overcapacity,financing difficulties and so on are becoming common problems faced by many enterprises.Therefore,it is of great significance to study the relationship between asset liquidity and capital cost in the Chinese market environment.It is helpful to further understand the impact of asset liquidity on corporate fund-raising capacity and fund-raising cost.The paper studies all the manufacturing companies listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange's A-shares in 2007-2018,and studies the impact of the company's asset liquidity on its capital cost.It is necessary to explore the impact of asset liquidity on the cost of capital,considering that different industries not only have differences in the market level,but also have significant differences in the company's financial structure,and manufacturing industry is the leading sector of China's economic growth,accounting for the largest proportion of listed companies in China,not only are there more data available,but also from the point of view of the company's financial statement structure,the asset structure of manufacturing enterprises has the characteristics of large scale of inventory and fixed assets.At the same time,considering the different ways of corporate financing,the cost of capital can be divided into debt capital cost and equity capital cost.Therefore,the paper studies the impact of asset liquidity on debt capital cost and equity capital cost of manufacturing listed companies,and further analyzes the heterogeneity of the relationship between corporate liquidity,debt capital cost and equity capital cost.Firstly,the paper uses the literature research method to collect and sort out the relevant literature about asset liquidity,debt capital cost and equity capital cost,and systematically understand and grasp the research status of the research related to the paper at home and abroad.Then,the paper uses the ordinary least squares regression method to empirically study the impact of corporate liquidity on debt capital cost and equity capital cost of manufacturing listed companies.It is found that there is a significant negative correlation between corporate asset liquidity and debt capital cost and equity capital cost in the manufaturing listed companies.Moreover,the empirical results have passed the robustness test and endogenous test.Finally,the research objects are divided into groups according to the nature of property rights and market value,and the heterogeneity analysis is carried out on the relationship between asset liquidity,debt capital cost and equity capital cost.After grouping according to the nature of property rights,the empirical results show that the negative correlation between asset liquidity and debt capital cost and equity capital cost is more obvious in state-owned manufacturing listed companies.There is no correlation between asset liquidity and debt capital cost and equity capital cost in non-state-owned manufacturing listed companies.After grouping by market value,the results show that the negative correlation between asset liquidity and debt cost of capital,equity cost of capital are both significant in the two samples.And for small market value manufacturing listed companies,asset liquidity reduces the cost of debt capital and equity capital more.The contribution of the paper is reflected in two aspects:Firstly,the paper examines the impact of corporate asset liquidity on debt capital cost of manufacturing listed companies through empirical research.It is found that there is a significant negative correlation between corporate asset liquidity and debt capital cost in the manufaturing listed companies,and provides empirical evidence for the view that the increase of asset liquidity can reduce debt capital cost.Secondly,it examines the impact of corporate asset liquidity on the cost of equity capital of manufacturing listed companies in the Chinese market environment,and enriches the relevant research on the impact of asset liquidity on equity capital.