Research on the impact of cost of equity capital on firm new quality productive forces in China

We provide the first comprehensive and robust evidence of the relationship between the cost of equity capital and a firm new quality productive forces in Chinese-manufacturing firms. We find that cost of equity capital has an overall negative effect on firm new quality productive forces. Our findings are robust to a battery of tests, including endogeneity checks using instrumental variables, Propensity Score Matching (PSM) and the Heckman Correction method. The negative relationship between board independence and firm new quality productive forces is stronger in non-state-owned firms, in firms in high-tech industries and in firms with strong financing constraints. The cost of equity capital reduces new quality productive forces by reducing the level of R [and] D investment and the quality of corporate governance; improving the quality of firm information disclosure, increasing the shareholding of institutional investors and reducing the uncertainty of economic policy can help reduce the negative impact of cost of equity capital on firm new quality productive forces.