Welcome to Francis Academic Press

Academic Journal of Business & Management, 2024, 6(5); doi: 10.25236/AJBM.2024.060526.

Impact of Food Corporation Social Responsibility Information Disclosure on the Cost of Equity Capital—Taking Internal Control as the Regulating Variable

Author(s)

Lihui Liu, Bo Li, Qiong Huang, Yuhua Kang

Corresponding Author:
Bo Li
Affiliation(s)

Department of Economics and Management, Foshan University, Foshan, China

Abstract

In the background of a number of food safety problems in China, the fulfillment of social responsibilities in the food industry has become the focus of attention, and the cost of equity capital is an important factor affecting corporate equity financing. The academic community has begun to pay attention to whether the fulfillment of corporation social responsibilities will have an impact on the cost of equity capital. This paper takes 37 A-share listed food companies in Shanghai and Shenzhen stock exchanges that released corporation social responsibility reports from 2010 to 2022 as the research objects, constructing relevant model and using internal control as the adjusting variable to study the relationship between corporation social responsibility disclosure and the cost of equity capital. Empirical results show that there is a negative correlation between the corporation social responsibility disclosures and the cost of equity capital, and internal control can inhibit the increase in the cost of equity capital caused by the decline in the quality of corporation social responsibility disclosures. Finally, this paper puts forward some suggestions: Improving corporation social responsibility information disclosure standards; Establishing a corporation social responsibility reward and punishment mechanism; Strengthening corporate internal control.

Keywords

Corporation social responsibilities; Cost of equity capital; Internal controls

Cite This Paper

Lihui Liu, Bo Li, Qiong Huang, Yuhua Kang. Impact of Food Corporation Social Responsibility Information Disclosure on the Cost of Equity Capital—Taking Internal Control as the Regulating Variable. Academic Journal of Business & Management (2024) Vol. 6, Issue 5: 191-198. https://doi.org/10.25236/AJBM.2024.060526.

References

[1] Davis K.Can business afford to ignore social responsibilities? [J].California management review, 1960,2(3):70-76.

[2] Malik F, Wang F, Naseem M A, et al. Determinants of corporation social responsibility related to CEO attributes: An empirical study [J]. Sage Open, 2020, 10(1):1-12.

[3] Xu Z Y, Yang M. Review on the relationship between corporation social responsibility information disclosure and equity capital cost [J]. Communication of Finance and Accounting, 2017(34):41-43.

[4] Zhang C, Gao Y Y. The nature of equity ownership, Accounting conservatism and corporation social responsibility information Disclosure [J]. Friends of Accounting, 2017(21):55-56.

[5] Lei L, Zhang D Y, Ji Q. Joint institutional shareholding and corporate ESG performance [J]. Economic Research Journal, 2019,58(04):133-151. (in Chinese)

[6] Wang H C, Wang X, Gao S H. Will equity pledge of Controlling Shareholders Increase the cost of equity capital of enterprises: Based on empirical evidence of listed companies in China [J]. Economic Theory and Management, 2019(11):14-31.

[7] Li S, Li Y Y, Du Y G. Customer stability and Cost of equity capital: An Analysis based on Risk-taking Perspective [J]. Systems Engineering, 2019, 41(02):72-88. (in Chinese)

[8] Teng Z L, Han J. Corporation social responsibility information disclosure, Analyst forecast and cost of equity capital [J]. Communication of Finance and Accounting, 2017(12):16-18.

[9] Tong M H, Xu D Y, Zheng T W. Corporate environmental information disclosure and cost of equity capital: An analysis of the mediating effect based on information transparency and corporation social responsibility [J]. Research on Finance and Economic Issues, 2020(02):63-71.

[10] Wei H, Yao Y Y, Ma X K. Can the fulfillment of corporation social responsibility Reduce the cost of equity capital? [J]. Finance and Economics, 2020, No. 515(06):29-36.

[11] Huang J Y, Jin Y. Research on the impact of corporation social responsibility on the cost of equity capital: from the perspective of corporation social responsibility reporting and verification [J]. Industrial Economics Research, 2016(02):87-95.

[12] Feng Z Y, Wang X C, Feng D T, et al. Corporation social responsibility Behavior and Cost of equity Capital: An Empirical Study of Listed Companies in China [J]. Friends of Accounting, 2016, (12): 46-52.

[13] Zhang Z Y, Deng B F. Can CSR reporting Assurance reduce the cost of equity capital? Collected Essays on Finance and Economics, 2017, (05): 60-68.

[14] Han Z C, Zhang Y T. Corporation social responsibility information Disclosure, capital cost and Enterprise Sustainable Development Ability: from the perspective of impression management [J]. Communication of Finance and Accounting, 2022, (03): 41-46+56.

[15] Meng X J, Xiao Z P, Qu J L. The Interactive relationship between corporation social responsibility information Disclosure and capital cost: An analytical framework based on the perspective of information asymmetry [J]. Accounting Research, 2010(09):25-29+96.

[16] Cai G L, Zhang Y N, Xu Y, et al. Investor-listed Company interaction and resource allocation efficiency in Capital market: Empirical evidence based on cost of equity capital [J]. Management World, 2012, 38(08):199-217.

[17] Yun H, Xue D. An empirical study on the impact of internal control quality on the cost of capital of Listed companies [J]. China Market, 2021(16):168-169+188.

[18] Zeng L, Dai W T. The impact of mandatory internal control audit on the cost of equity capital: Empirical evidence from progressive difference-difference model [J]. Research on Financial and Economic Issues, 2021, 455(10):103-111.

[19] Zhu Q X, Guo H, Ma H C. corporation social responsibility performance, accounting conservatism and cost of equity capital [J]. Communication of Finance and Accounting, 2019(31): 20-24.

[20] Jin X K, Xu L P, Xin Y. Enterprise digitization and cost of equity capital [J]. Research of Finance and Economics, 2023, 49(09):79-93+123.