The impact of company participation in supply chain alliances on the cost of equity capital: Evidence from China

The alliance cooperation between corporations and upstream and downstream corporations in the supply chain is of great significance for optimizing resource allocation and enhancing company competitiveness. However, due to the limitation of data availability, there is still a lack of empirical tests on the economic consequences of firms' participation in supply chain alliances. Based on the data of strategic cooperation announcements issued by China's A-share listed companies from 2016 to 2022, this paper manually identifies supply chain alliances and studies the impact of companies' formation or participation in supply chain alliances on the cost of equity capital. The results show that forming or participating in supply chain alliances can effectively reduce the cost of equity capital for companies. The channel test shows that companies forming or participating in supply chain alliances can reduce the cost of equity capital by easing financing constraints and improving competitiveness. Further analysis shows that the pre-set amount and equity-based alliance in the alliance agreement have a more significant effect on reducing the cost of equity capital. At the same time, in regions with a higher degree of marketization and companies with weak supply chain discourse power, the effect of reducing the cost of equity capital after forming supply chain alliance is more significant. This paper reveals the impact of supply chain alliances on the cost of equity capital for corporations, enriches the research on the influencing factors of equity capital cost and the mechanism of company participation in supply chain alliances, helps the capital market improve the signal recognition ability of supply chain alliances, improves the efficiency of capital allocation and the rationality of capital flow, and provides ideas for promoting the quality and efficiency of supply chain alliance.