Author(s)

Fengxin Zhu, Yufang Ding and Dan Liu

Corresponding Author

Yufang Ding

ABSTRACT

This paper selects ZTE’s financial data from 1999 to 2019 as a sample and analyzes the changes in investment efficiency of enterprises in different stages of the implementation of financial shared services with the help of the investment efficiency model, and compares it with the industry as a whole. Then use the capital asset pricing model to study the impact of investment efficiency changes on corporate equity financing costs. The results show that the introduction of the financial shared service center has indeed improved the investment efficiency of ZTE Corporation, especially when the shared service is in the growing period, it has a more significant effect on the improvement of investment efficiency. At the same time, when ZTE’s investment efficiency is high, the expected return rate required by investors decreases, and the cost of equity financing of the company will also decrease. Otherwise, the cost of equity financing of the company will increase.

KEYWORDS

ZTE, financial shared services, investment efficiency, equity financing costs