Variable name  Variable symbol  Variable definitions 
Dependent variable 


Cost of equity capital  COE  Implied equity capital cost based on the GLS model (1) 
Explanatory variables 


Social integrity level  Honesty  Honest Social Environment Index in Business Environment Index 
Control variable 


Beta coefficient  Beta  Stock beta 
Company Size  Lnassets  Natural logarithm of total assets at the end of the year 
Book market value ratio  Bm  The ratio of book value of shareholdersâ€™ equity to market value 
Business risk  Oprisk  The ratio of the sum of noncurrent assets at the end of the year to the total assets at the end of the year 
Financial Risk  Finrisk  The ratio of total liabilities at the end of the year to total assets at the end of the year 
Hand turnover rate  Turnover  The ratio of annual number of shares traded to a total number of shares outstanding at the end of the year 
Profitability  Roa  The ratio of annual net profit to total assets at the end of the year 
Asset turnover  Assturn  The ratio of annual operating income to total assets at the end of the year 
Growth  Income grow  The annual operating income growth rate 
Dividend payout ratio  Rdiv  The ratio of total annual cash dividends to the net profit 
Equity concentration  Hfd  The sum of the squares of the shareholding ratios of the first to fifth largest shareholders at the end of the year 
Year  Year  Set dummy variables for each year from 2005 to 2013 
Industry  Industry  Set dummy variables for 20 industries 