The impact of water information disclosure on the cost of capital: An empirical study of China's capital market

This study seeks to understand the underlying relationship between water information disclosure and the cost of capital in Chinese high‐water risk firms. With continuous strengthening of the Chinese Government's water regulation policy, water resources have begun to affect the sustainable development of enterprises. Many stakeholders have begun to pay attention to a series of water resources issues that companies face. As an important means of transmitting signals between enterprises and capital markets, water information disclosure can help enterprises achieve more favourable views of stakeholders. Using a sample of 334 listed companies in the Chinese high‐water sensitivity industry from 2010 to 2015, this paper examines the influence of these firms' water information disclosure on the cost of capital, and analyses the function mechanism of political connection on the relationship between water information disclosure and enterprise capital cost by using a panel regression model.