Abstract: As an informal institutional arrangement that is embedded in the enterprise for a long time, whether the interlocking director network can reduce the cost of equity capital through resource acquisition and information transfer needs to be further studied. The specific effect and impact path of the interlocking directors′ network on the cost of equity capital are examined by the social network analysis method through the data of A-Share listed companies in 2009-2016 years. The results show that the higher network location of the interlocking directors can significantly reduce the cost of equity capital of the enterprise;after the endogeneity test and a series of robustness tests, the above conclusions are still established. Further impact mechanism analysis and intermediary effect test show that operating risk and information risk play a significant intermediary role in the impact of the cost of equity capital on the interlocking director network, that is, the higher network location of the chain directors can reduce the cost of equity capital by reducing operating risk and information risk. The conclusion provides empirical evidence for in-depth understanding of the internal mechanism of interlocking director network affecting the cost of equity capital.

Key words: interlocking director network, cost of equity capital, operating risk, information risk