Study On The Impact Of Stock Price Volatility On Equity Capital Cost

Since the establishment of Chinese stock market,the sharp volatility of stock price has occurred from time to time.The volatility of stock price is the most concerned and feeble place for investors.Compared with the western developed countries,china's capital market starts later,and the relevant systems are not mature enough.However,after nearly 35 years of development,from lack of experience to increasingly perfect,the stock market affects people more and more,and its economic position is higher and higher.For promoting the sustainable development of capital market and stabilizing enterprises and social economy,it is necessary to study stock price volatility and take targeted measures to mitigate the impact of stock price volatility.The cost of equity capital,as the price paid by the listed company to issue common stock to obtain funds,is one of the core of the company's financial management,and plays a significant role in evaluating company's economic situation.Recently,although the impact of stock price volatility on the cost of equity capital has attracted the attention of scholars,scholars mostly study the impact from the perspective of stock price crash risk,and the study directly from the perspective of stock price fluctuation itself is not comprehensive enough,which needs to be further explored.This paper discusses the research background and significance of the topic,reviews the relevant literature at home and abroad,and puts forward five hypotheses based on the hypothesis of stock price fluctuation theory,information asymmetry theory,investment risk theory and related theory of equity capital cost.This paper selects Shanghai and Shenzhen A listed companies from 2008 to 2018 as the study sample,and the hypothesis is tested by descriptive statistics,correlation test and fixed effect regression model.Through the empirical research,this paper holds that there is a positive correlation between stock price volatility and equity capital cost,and the correlation is weakened in the state-owned enterprises or the companies in the regions with higher degree of marketization.In addition,the higher the proportion of equity concentration or institutional investors in listed companies,the lower the impact of stock price volatility on the cost of equity capital.Based on relevant literature andempirical analysis,this paper puts forward some suggestions to reduce the cost of equity capital from five dimensions:the development of securities analyst industry,the environment of equal competition,the balance of marketization process,the perfection of equity structure and the role of institutional investors.The innovation of this paper mainly lies in: in order to study the influence of stock price fluctuation on the cost of equity capital,combining qualitative analysis with quantitative analysis to carry on the empirical test with the data from 2008 to2018.This paper is not only make the empirical results more accurate by updating the data,but also enriches the relevant research results.