Research on Relationship between Information Disclosure and Cost of Equity Capital for Small and Medium-Sized Enterprises

Yan Yu Zhang

doi:10.4028/www.scientific.net/AMM.462-463.833

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HomeApplied Mechanics and MaterialsApplied Mechanics and Materials Vols. 462-463Research on Relationship between Information...

Research on Relationship between Information Disclosure and Cost of Equity Capital for Small and Medium-Sized Enterprises

Abstract:

Relationship between information disclosure and the cost of equity capital for small and medium-sized enterprises was studied by calculating the cost of equity capital using the residual income model. A multiple regression model was built considering economic condition in China. It was found that earnings information may help the small and medium-sized enterprise to reduce the cost of equity capital. One important motivation was that significant positive correlation was seen between financial leverage and the small and medium-sized enterprises cost of equity capital. Besides, negative correlation was seen between enterprise scale and the small and medium-sized enterprises cost of equity capital.