Corporate reputation, information disclosure and cost of capital

Using data from Chinese listed companies on the Shanghai and Shenzhen Stock Exchanges from 2011 to 2023, this study comprehensively investigates how corporate reputation influences cost of capital, along with its underlying mechanisms and economic ramifications. Drawing upon information asymmetry and signaling theories, this study constructs a systematic reputation evaluation index framework. It quantifies the cost of capital using the weighted average cost of capital, and a dual-channel analysis reveals the economic value of reputation by focusing on information disclosure quality and financing constraints. Results show that corporate reputation substantially diminishes the cost of capital, specifically by enhancing information disclosure quality and easing financing constraints. This impact is more pronounced in large-scale enterprises, whereas it exhibits no significant effect on small-scale counterparts. This discrepancy highlights the moderating influence of resource endowment and public attention on the relation between reputation and the cost of capital.