Faced with the increasing risk of supply chain disruption, more firms are using mergers and acquisitions or investments to expand their core business's upstream and downstream supply chain and improve their vertical integration. In this vertical integration trend, the cost of capital for core firms is crucial to coordinating the entire supply chain. We manually collected input-output matrix data of segmented departments and supply chain value-added data to explore how vertical integration impacts the cost of equity. Using A-share listed firms from 2008 to 2021 as our sample, the results of our regression analyses show that vertical integration plays a significant role in reducing the cost of equity. These results remain consistent throughout a series of robustness tests. The channel tests indicate that vertical integration can reduce the cost of equity by reducing operating risk and mitigating information asymmetry. Additional analyses show that vertical integration's impact on the cost of equity is more pronounced for firms with more intense industry competition, lower product market positions, lower supply chain concentration, weaker corporate governance, and more aggressive strategies, as well as firms in regions with lower marketization processes and weaker trust environment. Our findings contribute to the literature on the economic consequences of vertical integration from the perspective of corporate financing behavior and extend the literature on cost of equity determinants to the field of supply chains.

中文翻译：

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垂直整合会降低股权成本吗？


面对日益增长的供应链中断风险，越来越多的公司正在利用并购或投资来扩大其核心业务的上下游供应链，并改善其垂直整合。在这种垂直整合趋势中，核心公司的资本成本对于协调整个供应链至关重要。我们手动收集了分段部门的投入产出矩阵数据和供应链增值数据，以探索垂直整合如何影响股权成本。以 2008 年至 2021 年的 A 股上市公司为样本，我们的回归分析结果表明，垂直整合在降低股权成本方面发挥着重要作用。这些结果在一系列稳健性测试中保持一致。渠道测试表明，垂直整合可以通过降低运营风险和缓解信息不对称来降低股权成本。其他分析表明，垂直整合对股权成本的影响对于行业竞争更激烈、产品市场地位较低、供应链集中度较低、公司治理较弱和战略更激进的公司，以及位于市场化流程较低和信任环境较弱地区的公司更为明显。我们的研究结果从公司融资行为的角度为垂直整合的经济后果的文献做出了贡献，并将关于股权决定因素成本的文献扩展到供应链领域。