Financial development and the cost of equity capital:Evidence from China

• 作者: Haiping Wang Jeong-Bon Kim Mary L.Z.Ma
• 来源期刊: 中国会计学刊：英文版
• 学科: 经济
• 关键词: FINANCIAL development COST of EQUITY CAPITAL LAW a
• 年，卷（期）: 2015,（4）
• 页码范围: 243-277
• 页数: 35页
• 分类号: F832.51

摘要

This study examines the relation between province-level financial development and the cost of equity in China.Our main findings are that(1)stock market development reduces the cost of equity in general,but the effect diminishes significantly in state-owned enterprises(SOEs)and firms with high growth potential or innovation intensity and(2)banking development only marginally lowers the cost of equity,but the effect is stronger in non-SOEs.Further analysis reveals that stock market development substitutes for such institutional factors as accounting quality,law enforcement,stock market integration and the split-share structure reform in lowering the cost of equity.We also find that lack of banking competition and banking marketization and under-development of the non-state economy partially account for the weak effect of banking development on the cost of equity.