Abstract
Data has emerged as a critical production factor shaping firms’ operational performance and capital market outcomes. However, whether and how data factor utilization intensity affects equity pricing remains underexplored. Using Chinese A-share listed firms from 2011 to 2024, this study examines the relationship between data factor utilization intensity and the cost of equity. The results show that firms with higher levels of data factor utilization intensity face significantly lower cost of equity. Mechanism analyses suggest that data factor utilization may reduce the cost of equity through two complementary channels. The enhancement effect improves firms’ fundamental conditions by strengthening managerial synergy capacity and the allocation efficiency of slack resources; in contrast, the prospect effect optimizes capital market recognition of enterprises via facilitating information dissemination and boosting positive investor sentiment. Together, these channels may reduce multiple dimensions of equity risk premia, thereby lowering firms’ cost of equity. The effect is more pronounced among firms with lower technological and human capital investment, weaker corporate governance, and lower absorptive capacity. Overall, this study provides new evidence on the capital-market consequences of data factor utilization intensity and highlights the role of data as a strategic production factor in reducing the cost of equity.