Corporate governance and cost of equity capital — Research based on the transmission mechanism of earnings quality

With the data in 2006 of Chinese listed companies, by building a G-index, we analyze the relationship of corporate governance and cost of equity capital, and then further study the transmission mechanism of earnings quality between corporate governance and cost of equity capital. Research consults indicate that earnings quality play a transmission role, specifically, corporate governance can affect the information disclosure action of managers, which will enhance the qualities of earnings information disclosure, then reduce the degree of asymmetry with investors and ultimately reduce the cost of equity capital.