Founding family control, information disclosure and equity capital cost

High-quality information can decrease information asymmetry between corporation and investors, thereby decreases equity capital cost. Using sample of refinancing from 2003 to 2007, this paper explores influence mechanism of family controls has on the relationship between information disclosure and equity capital cost. The research indicates that equity capital cost of corporation controlled by founding family is significantly lower than that of other corporations. Furthermore, under different ownerships, different relationships exist between information disclosure and equity capital cost. As to founding family, the long-term operation feature helps to reduce the transaction cost, and becomes the substitute of high-quality information disclosure.