Research on the Impact of Heterogeneity of Institutional Investors on the Cost of Equity Capital

This paper divides institutional investors into independent investors and non-independent investors according to their independence, and studies whether they can reduce the cost of capital in the process of equity financing, so as to explore whether institutional investors can play an active role in shareholder governance. Empirical research finds that institutional investors can reduce the cost of equity capital of the company. According to the further research, the author finds that independent institutional investors can significantly reduce the cost of equity capital, while non-independent institutional investors can also reduce the cost of equity capital, but the effect is not significantly. Keywords—institutional investors; governance of a company; cost of equity capital