| The impact of exchange rate changes on the real economy has always been an important issue for academics and policy circles.After the People’s Bank of China announced the opening of the RMB exchange rate reform in July 2005,the RMB exchange rate entered a long path of appreciation.At the same time,many related studies on the impact of RMB exchange rate changes on China’s economy have emerged in the academic circle.Many documents have studied the macro effects of exchange rate changes from the perspectives of economic growth,financial supervision,international trade,and international capital flows,but these are difficult to reveal the micro effects of exchange rate changes.Therefore,more and more scholars have begun to explore the impact of exchange rate changes on the operating performance of microenterprises.The general view is that the appreciation of the domestic currency will affect the company’s profitability and business decision-making by affecting the prices of enterprises’ import and export products and domestic market competition.In recent years,as the Chinese economy has entered a new normal transition from high-speed growth to high-quality growth,corporate debt leverage has continued to rise.Excessive leverage and rapid growth are often used as warning signs of financial crises.As a result,international research institutions such as the International Monetary Fund and many scholars have suggested that China should attach great importance to the rapid increase in corporate leverage.For this reason,the Party Central Committee and the State Council listed "deleveraging" as one of the important tasks of the "three removals,one reduction and one supplement" for the supply-side structural reform in2015.At the same time,it has attracted the attention of many researchers on the issue of Chinese corporate leverage.Many scholars have examined the influence of conventional capital structure determinants,monetary policy,fiscal policy,financial stability,and other domestic closed angles on the corporate leverage ratio.As China’s trade liberalization continues to advance,the impact of exchange rate factors on corporate profitability and business decisions will become more important(Ding Jianping et al,2020).The changes in profitability and operating decisions will have an important impact on corporate financing decisions(Financing Priority Theory,Myers,1984;Myers and Majluf,1984;trade-off theory,Baxter,1967;Myers,1977).Therefore,corporate financing decisions(that is,changes in the leverage ratio)should not only consider the traditional capital structure determinants,but also the impact of open factors such as exchange rates and trade liberalization.To this end,this article extends the issue of corporate leverage to the field of international financial trade,focusing on the internal mechanism and effects of the impact of the RMB exchange rate on corporate leverage.The main content and characteristics of this paper:(1)Research on the impact of RMB exchange rate changes on the manufacturing corporate leverageIn theory,the appreciation of a country’s currency is conducive to corporate imports,and import infiltration will intensify competition in the domestic market.Thereby affecting the production scale decision,productivity level and profitability of enterprises(Lu Xiangqian and Dai Guoqiang,2005;Li Hongbin et al,2011;Xu Jiayun et al,2015a;Wang Yaqi and Lu Bing,2018).The production scale decision will affect the company’s capital requirements for various production costs to a certain extent,thereby further affecting the company’s financing decisions.Bergin et al.(2019)pointed out that exogenous shocks may induce companies to change their financing structure to ease financing constraints.Accordingly,the change in the RMB exchange rate is an exogenous shock,and the domestic market competition it induces may induce companies to change production decisions,thereby adjusting existing financing plans and affecting corporate leverage.To this end,this article is based on Berman et al.(2012),Manova(2012),Zhang Yan et al.(2013)model research framework for evolutionary derivation,and found the mechanism of leverage affected by exchange rate: The leverage of domestic manufacturing companies declines with the increase in the exchange rate.Further,the increase in the exchange rate forces some highly leveraged companies to withdraw from the market,and at the same time forces some companies to increase their productivity levels,thereby helping to reduce the industry’s average leverage ratio and increase the industry’s average productivity.Namely "exit effect" and "reverse effect".For this reason,this paper adopts the difference method(DID),and conducts empirical analysis based on the panel data of Chinese manufacturing enterprises,and the results better verify the theoretical speculation.In addition,according to the theoretical model setting,this paper also tested the heterogeneity factors,and found that,for companies that are highly dependent on external financing or have greater financing constraints,appreciation makes the reduction in leverage smaller;for smaller companies,appreciation makes the greater the reduction in leverage;for companies with lower fixed costs,appreciation makes the leverage fall more.(2)Research on the effect of RMB exchange rate changes on various leverage ratios of different types of enterprisesFrom the above mechanism derivation and empirical analysis,it can be seen that the appreciation of the renminbi will generally help companies reduce leverage.In practice,for different types of companies,the degree of leverage that is affected by exchange rate changes may be inconsistent.For example,when the appreciation of the RMB brings pressure on the domestic market for similar commodities,the appreciation of the company will also bring about the cost of imported intermediate products has been reduced,which weakens the effect of competition,and ultimately affects the difference in the range of changes in corporate leverage.Furthermore,for different types of leverage,the extent of their adjustments due to exchange rate changes may also vary.For example,corporate long-term and short-term leverage,book leverage and market capitalization leverage may have different effects on exchange rate changes.Therefore,it is necessary to further analyze the differential effect of RMB exchange rate changes on the various leverage of different types of enterprises.To this end,this paper introduces the exchange rate and intermediate factors into the Melitz(2003)model,and combines the financing priority theory to establish a theoretical model of the relationship between exchange rates and different types of corporate leverage,revealing that the appreciation of the domestic currency affects different types of companies through the level of corporate profitability.The internal mechanism of changes in corporate leverage,and empirical testing of different types of leverage using data from Chinese manufacturing companies.The results showed that the appreciation of RMB significantly reduced corporate leverage,especially total book leverage,short-term book leverage,and total market capitalization leverage;the degree of leverage reduction is related to the company’s import and export behavior;and it is also affected by corporate heterogeneity factors.(Ownership structure,technology and productivity levels,financing constraints).In addition,from the micro-mechanism test,it is also found that the profit effect and the adjustment effect are the reasons for the difference in the decline of different types of enterprises and different types of leverage.(3)Research on the impact of RMB exchange rate fluctuations on the manufacturing corporate leverageThe impact of exchange rate factors on companies not only includes the impact of changes in exchange rate levels on companies,but also scholars discuss the impact of exchange rates on companies from the perspective of exchange rate volatility.Especially since the “8.11 exchange rate reform” in 2015,the RMB exchange rate has fluctuated more frequently,and in the past two years,affected by many uncertain events at home and abroad,the exchange rate has entered a normal state of fluctuations.The effects of exchange rate fluctuations on business decisions and financing decisions will also increase accordingly.Therefore,it is necessary for us to further examine the impact of exchange rate fluctuations when studying the impact of exchange rate on corporate leverage.To this end,this article constructs exchange rate fluctuation indicators to specifically analyze the impact of RMB exchange rate fluctuations on corporate leverage.The results showed that exchange rate fluctuations increased by 1 percentage point,leading to an increase of 1.313 percentage points and 1.478 percentage points in corporate short-term book leverage and short-term market capitalization leverage,as well as an increase of 1.762 percentage points and 1.965 percentage points in total book leverage and total market capitalization leverage.Rising exchange rate fluctuations will increase the short-term leverage of enterprises,and the conclusion that the total leverage will increase is all valid when considering endogenousness and various robustness tests.And in the heterogeneity test,it is also found that the effect of exchange rate volatility intensifying the increase in corporate leverage is mainly reflected in foreign trade companies,non-state-owned companies,and non-zombie companies.Finally,through the discussion of micro-mechanism,the transmission mechanism of different types of companies and different types of leverage affected by exchange rate fluctuations is given.(4)Research on the impact of trade liberalization on the manufacturing corporate leverageAn important external condition for the impact of the RMB exchange rate on corporate leverage is opening up,especially the promotion of trade liberalization.The signing of the Regional Comprehensive Economic Partnership Agreement(RCEP)means the establishment of the world’s largest free trade zone on November 15,2020,and China is an important member of the member states.The signing of the agreement will help the Chinese market open up.Therefore,it is necessary to explore the impact of trade liberalization factors on corporate leverage.To this end,this paper constructs a simple partial equilibrium model based on the model of Bergin et al.(2019),taking intermediate product manufacturers as the research object.From the theoretical derivation,it can be seen that with the reduction of tariffs,the short-term leverage of domestic enterprises will decrease and the longterm leverage will increase;financing constraints will affect the extent to which companies adjust their leverage in the process of trade liberalization,and the higher the financing constraints,the smaller the degree of corporate leverage adjustment;compared with large companies,the reduction of tariffs will increase the scope of the short-term leverage reduction for small companies.Based on theoretical derivation,this paper uses the data of Chinese manufacturing enterprises for empirical analysis,and the results better verify the theoretical speculation.(5)Research on the impact of RMB exchange rate on the leverage ratio of manufacturing enterprises under trade liberalizationTrade liberalization will affect the leverage ratio of enterprises to a certain extent.As an external factor,will trade liberalization also affect the effect of the RMB exchange rate on the leverage ratio of enterprises.Therefore,it is necessary for us to further analyze and consider the impact of the RMB exchange rate on the leverage ratio of manufacturing enterprises under trade liberalization.This paper conducts an empirical analysis based on the data of listed Chinese manufacturing companies.The results show that whether the least squares method is used for benchmark regression,or the instrumental variable regression and Poisson pseudo-maximum likelihood fixed effect regression are used when considering the endogenous problem,a relatively stable conclusion has been obtained: a moderate appreciation of the renminbi helps companies reduce leverage;Trade liberalization is conducive to enterprises to increase long-term leverage and reduce short-term leverage;trade liberalization reduces the effect of RMB appreciation to help companies reduce long-term leverage,but it will strengthen the effect of RMB appreciation to help companies reduce short-term leverage.In the heterogeneity test,it is also found that the three conclusions in the benchmark regression are mainly established in non-small enterprises,enterprises with low financing constraints,and non-technology-intensive enterprises.According to the heterogeneity,the effects of different types of leverage ratios are also valid.has a difference. |
