Research On The Impact Of Capital Market Liberalization On Enterprise Financial Decision

Investment decision,financing decision and dividend distribution decision are the three core of corporate financial decision and play a vital role in the development of corporates.As the most basic unit in macro-economy,corporates have a significant impact on the development of the whole national economy.However,problems perplexing corporates such as weak investment,high financial leverage and"emphasizing financing and neglecting dividends",hinder the healthy development of corporates and the progress of the real economy.How to solve these series of problems faced by corporates has attracted extensive attention.Capital is the core production factor of market economy.Its liquidity reflects a country’s openness and the development level of financial market.The liberalization of capital market from Bshare issuance to the implementation of interconnection mechanism has had a farreaching impact on the improvement in China’s capital market system,the improvement in investor structure and the improvement in asset pricing efficiency.The liberalization of capital market will inevitably have an impact on the financial decisionmaking of corporates.It is of great theoretical value and practical significance to solve the problems plaguing corporates and the market,promote the healthy development of corporates and realize the goal of finance better serving the real economy by exploring the relationship between capital market liberalization and corporate financial decisionmaking.Based on above mentioned background,this paper reviews the institutional background of capital market liberalization on the basis of combing and commenting on the relevant literature on the economic consequences of capital market liberalization and the influencing factors of corporate financial decision-making.According to the information asymmetry theory,principal-agent theory and financing constraint theory.This paper deeply analyzes the impact on capital market liberalization on corporate financial decision-making and the possible mechanism deeply from the theoretical level.On this basis,this paper empirically tests to discuss the impact and mechanism of capital market liberalization on corporate investment decision,financing decision and dividend distribution decision.Finally,it puts forward targeted policy suggestions for capital market liberalization to better serve the real economy.The main contents of this paper are as follows:Firstly,this paper discusses the impact of capital market liberalization on corporate investment level,explores two possible mechanisms of information quality and financing constraints,and further tests the heterogeneity from three aspects:the nature of property rights,information transparency and transaction activity,and investigates the impact of capital market liberalization on corporate financial asset investment,corporate investment efficiency and corporate value.The results show that capital market liberalization has effectively promoted the improvement on China’s corporate level,which is embodied in the investment scale and investment intensity.The liberalization of capital market can attract more analysts’ attention,improve the information environment of corporates,improve the quality of information,guide the investment of corporates and promote the improvement on investment level of corporates.The liberalization of capital market broadens the source of funds of corporates,alleviates the financing constraints of corporates,and then promotes the improvement on corporates investment level.From the further heterogeneity research,it can be found that,the corporates with poor information transparency and the target corporates with active transactions of "Shanghai-Hong Kong Stock Connect" and"Shenzhen-Hong Kong Stock Connect" among the non-state-owned corporates with property rights,the promoting effect of capital market liberalization on corporate investment level is more significant.A certain inhibitory effect of the liberalization of capital market on the financial asset investment of corporates has been confirmed,which can improve the investment structure of corporates and promote the physical investment of corporates to a certain extent.In the study of corporate inefficient investment,it is found that capital market liberalization has a significant improvement effect on the underinvestment of corporates,but none significant impact on the overinvestment of corporates.Capital market liberalization promotes the promotion of corporate value by improving the level of corporate investment.Secondly,this paper discusses the impact of capital market liberalization on corporate financing decision-making from the perspective of corporate capital structure,tests the heterogeneity from the perspective of property right nature,internal governance and external governance.It also studies the impact of capital market liberalization on the reduction level of corporate financial leverage and the deviation degree of capital structure.The study found that the liberalization of capital market increases the reduction level of corporate financial leverage by improving information quality and alleviating financing.This increasing effect is more obvious in non-stateowned corporates and corporates with relatively low level of corporate governance.Further research shows that the impact of capital market liberalization on the reduction of financial leverage only exists in corporates with upward deviation of capital structure.Capital market liberalization can help to improve the level of corporate governance,and then restrain the deviation of corporate capital structure.In the study of the impact of capital market liberalization on the speed of corporate capital structure adjustment,it is found that capital market liberalization can accelerate the speed of corporate capital structure adjustment.In the sub sample of corporate capital structure with downward adjustment,it has a significant accelerated effect on the downward adjustment of capital structure,but has insignificant impact on the sub sample of corporate capital structure with upward adjustment.From the perspective of the deviation degree of enterprise capital structure,it is found that the opening of capital market reduces the financial risk of enterprises and improves the business performance of corporates.Finally,this paper investigates the impact of capital market liberalization on corporate dividend distribution decision,analyzes it from the perspectives of stock dividend and cash dividend,explores the possible mechanism of affecting stock dividend and cash dividend,and further tests the heterogeneity.Capital market liberalization decreases stock dividends and increases cash dividends by improving the quality of information and the level of corporate governance.Further research found that the inhibitory effect of capital market liberalization on corporate stock dividend distribution is more significant in companies with high-priced stock and lower information transparency,while the promoting effect on corporate cash dividend distribution is more significant in companies with high agency costs(including the first kind of agency costs and the second kind of agency costs)and high risk of stock price crash risk.From the perspective of micro corporate financial decision-making,this paper studies the economic effects of capital market liberalization to the outside world.The possible contributions are as follows:First,this paper further extends the research on the economic consequences of the implementation of interconnection mechanism to the problems of corporate physical investment bias and "transition from real to virtual economy".It reveals the internal logic of the capital market liberalization promoting the high-quality development of the real economy from a microscopic perspective.This paper explains the possible impact of the implementation of interconnection mechanism on the level of corporate physical investment from the theoretical level,and empirically tests the impact of capital market liberalization on the level of corporate industrial investment,and focusing on the two possible mechanisms of information environment and financing constraints.Second,this paper further extends the research on the economic consequences of the implementation of the interconnection mechanism to the problem of corporate capital structure,and reveals the theoretical basis for the capital market liberalization to the outside world to prevent and resolve macroeconomic risks from a micro perspective.This paper explains the impact of the implementation of interconnection mechanism on the capital structure of corporate from the theoretical level,and empirically tests the impact of capital market liberalization on the level of financial leverage reduction and capital structure deviation,as well as the possible mechanism.Third,this paper reveals the internal logic of capital market liberalization to guide value investment from a micro perspective.This paper explains the influence of the implementation of interconnection mechanism on dividend distribution from the theoretical level,empirically tests the economic effect of capital market liberalization on the stock dividend distribution and cash dividend distribution,and reveals the possible mechanism.