Deregulation Of Market Access And Financing Cost Of Companies

Negative list system of market access pilot is one of the major economic system reforms in China,which has been widely concerned by investors since its promulgation and implementation.The definition of the list has been clarified in the "Several Opinions of the State Council on Promoting Fair Market Competition and Maintaining the Normal Order of the Market" issued by the State Council in July 2014.Guided by the principle of "entry is not prohibited",it clearly lists the industries,fields and businesses that are prohibited or restricted from investment and operation in China.For the items in the list,if market entities plan to enter,they need to judge whether they are qualified to enter according to the terms of the negative list,while for the items outside the list,market entities themselves decide whether to enter.For other matters,the market entity decides whether to enter.Compared with the previous hybrid list access mode,the negative list access mode can reduce the cost and uncertainty of capital entering the market,help guide capital to flow to the regions that implement the negative list system of market access,and improve the more reasonable allocation of regional factor resources.The negative list of market access,as the institutional regulations for the access of market entities,integrates various previously dispersed market access regulations in China,and achieves unified management of market access across the country.Through the intergration of negative list,the scatter entry rules in thr Catalogue of Investment Projects approved by the Government,Catalogue of Goods Prohibited from Import and Export,Catalogue of Land Use Restricted and Land Use Prohibited Projects,Catalogue of Guidance for Industrial Structure Adjustment,market access provisions in various laws and regulations and administrative examination and approval are unified in a single sheet.The negative list system of market access lightens the control tower for guiding the creation of market entities or investment management of certain projects.For the government,the list of items through the non-prohibid-on-entry approach is clearer,which avoids ambiguous wording and limits the government’s discretion in the gray area of access,which can also help reduce trade protectionism and rent-seeking behavior of local governments,and standardizate public power.As for the market,the negative list reduces the information asymmetry between market subjects and government management departments,makes market subjects clearer about the red line of their establishment or operation of businesses or investment projects,and helps to reduce their information search costs.At the same time,it also reduces the time cost and transaction cost caused by information asymmetry or external uneconomic factors.However,the existing research about negative listing market access system of the implementation of the impact on the enterprise microscopic literatures are scarce: at present,domestic researches on negative list of market access mainly focus on macro perspective,the significance and advantages of negative list establishment,and all of them are normative literatures.There is nearly no empirical analysis literature on the impact of negative list system on enterprises based on micro perspective.Based on the influence of the negative list of market access and its significance in the supply-side structural reform,this thesis takes this as an opportunity to study its impact on the financing cost of enterprises.Although previous studies on the deregulation of market access have been carried out,few literatures directly discuss the impact of the deregulation of market access at the national level on the financing cost of enterprises.The research setting similar to this thesis is that the US government adopted a series of deregulated access control policies that significantly reduced regulatory restrictions on several major industries from 1970 s to 1990 s.However,on the one hand,scholars have drawn different conclusions on this issue.Some believe that the deregulation of market access can increase the financing cost of enterprises,while others believe that the deregulation may reduce the financing cost of enterprises.On the other hand,most of the researches of American scholars on this subject involve at most five industries(oil and gas,public utilities,telecommunications and transportation,and entertainment).Most of these industries are monopolistic industries and are not universally applicable to the study of listed enterprises.Based on the above,this thesis carried out research about this.The main research contents are as follows: the research found that:(1)The product market opening brought about by the deregulation of market access can significantly reduce the debt financing cost of enterprises,and this conclusion has been tested after parallel trend testing,PSM,replacement of independent variable measurement methods,replacement of dependent variable measurement methods,and inclusion of pilot sites that may affect the negative list.The conclusion is still valid after a series of robustness tests;(2)Compared with state-owned enterprises,the easing effect of market access regulation on corporate debt financing constraints is more obvious for non-state-owned enterprises;(3)Compared with the regions with higher marketization development level,the easing effect of market access regulation on corporate debt financing constraint is more obvious in the regions with lower marketization development level;(4)Compared with the regions with higher degree of marketization of credit capital allocation,the reduction effect of market access regulation on corporate debt financing cost is more obvious in regions with lower degree of marketization of credit capital allocation;(5)Under the deregulation of market access control,the analysis of the consequences of changes in the corporate debt financing structure shows that the deregulation of market access control has led to total debt financing of enterprises accounted for the proportion of total assets scale,the proportion of short-term loans to total assets,the proportion of long-term loans to total assets,and current liabilities were significantly increased,increasing the proportion of debt financing in the level of corporate financing;(6)The significant reduction effect of product market opening brought about by market access deregulation on debt financing cost of enterprises mainly plays a role through easing debt financing constraints.Second,the relationship between the deregulation of market access and the cost of equity financing.The research found that:(1)the deregulation of product markets open market access can significantly increase the cost of equity financing of enterprises,and this conclusion has been tested after parallel trend testing,PSM,replacement of independent variable measurement methods,replacement of dependent variable measurement methods,and inclusion of pilot sites that may affect the negative list.The conclusion is still valid after a series of robustness tests;(2)Compared with enterprises with higher information disclosure quality,the increase of equity financing cost caused by market access deregulation is more obvious for enterprises with lower information disclosure quality;(3)Compared with the regions with higher legal development level,the improvement of market access regulation on the cost of equity financing is more obvious in the regions with lower legal development level;(4)The results of channel analysis show that the relaxation of market access regulation leads to the increase of investors’ risk expectation and the increase of enterprises’ equity financing cost by triggering the idiosyncistic risk effect of product market competition.The increase of competition squeezes the profits of mature enterprises in the industry,resulting in the increase of the idiosyncrasies of enterprises,which makes shareholders demand higher risk premium and increase the cost of equity financing of enterprises.On the other hand,the increase of market fairness and transparency brought by the deregulation of market access also makes shareholders have higher expectations for the development of enterprises,which is reflected in the improvement of shareholders’ expected rate of return,and also causes the increase of enterprise equity financing costs.Thirdly,the reasons for the difference between debt financing cost and equity financing cost caused by market access deregulation are analyzed.The results showed that:(1)the deregulation of product markets open market access can significantly improve the level of enterprise’s diversification,and corporate diversification strategy on the cost of debt capital and equity financing cost heterogeneity effect is caused by market deregulation of debt financing and equity financing costs affect one of the effects of different channel;(2)The above conclusions still hold after changing the dependent variable,changing the measurement method of enterprise diversification,parallel trend test,adding control variables that may affect the selection of the pilot negative list of market access,and robustness test of PSM matching;(3)Further analysis shows that,compared with areas with higher level of factor marketization development,the promotion effect of market access deregulation on enterprise diversification is more obvious in areas with lower level of factor marketization development.The main innovations of this thesis are as follows: first,this thesis expands the literature research on market opening.The current domestic market opening-related literature research mainly focuses on the opening of the stock market and the establishment of free trade zones.There are few empirical studies about the impact of the establishment of the negative list system on market access on the impact of the establishment of the negative list system on the capital market.Therefore,this thesis provides empirical evidence from the micro perspective for the implementation effect of the market access negative list system pilot,and provides some theoretical basis and policy enlightenment for further deepening the market reform and further opening of the product market in the future.Second,the research of this thesis enriched the relevant literature on the factors affecting financing costs.From the perspective of corporate financing costs,this thesis uses the negative list of market access as an exogenous event to study the impact of product market opening brought about by the deregulation of market access on corporate debt and equity financing costs.This thesis also analyzes the potential mechanism,which effectively complements the existing theoretical literature research and expands the research in related fields from the horizontal perspective of financing costs.