Abstract: As an important part of financial report, "Management's Discussion and Analysis" (MD&A) provides investors historical information to look at business conditions and forward-looking information on future events, and plays a crucial role in investors' decision-making. But MD&A disclosed by management is not dynamically adjusted in the time sequence, what the economic consequences it will bring to the capital markets, which is the issues investors and regulators are generally concerned about. Take as the object of our analysis the text information disclosure (MD&A) of the GEM listed companies in the past two years (2010-2012), in this paper, the level of MD&A inertia disclosure by the indicator "information similarity"is firstly quantitatively measured, then the asset pricing model-Fama-French Model is improved to explore the correlations between the information similarity and the cost of equity capital. The result of our study indicates that, a positive relationship between the information similarities with the cost of equity capital exists. This paper enriches the literature of information disclosure and enhances understanding of text information disclosure behavior.

Key words: MD&A, inertia disclosure, Fama-French model