Research On The Impact Of Margin Trading On The Capital Structure Of Listed Companies In China

Owing to the late start of China's securities market and the incompleteness of all aspects,the market did not allow short selling transactions in the past.This led that the market investors lacked the motivation to search for the negative corporate information.The company's negative information was unknown,and unfavorable news could not be reflected in the stock prices.As a result,the stock price will become artificially high,which caused the market to react hardly to bad news and the volatility of the stock price.Therefore,the start-up of China's margin trading mechanism is a major breakthrough in China's securities market in recent years,and this has opened the era of credit trading in China's securities market.In view of this,basing on the situation of China's margin trading and securities lending,this article studies the impact of the implementation of this system on the level of corporate capital structure,especially the impact on corporate asset-liability ratio.This article selects the data of listed companies in the Shanghai and Shenzhen stock exchanges and securities lending markets for 2012-2016 as an example to construct an empirical model for the effect of margin financing and short selling,and firstly we study the relationship between margin financing,intermediary variables(liquidity and volatility)and capital structure.In the study of the relationship between the three parties,at first,we discuss the direct impact of the margin financing and securities lending on the capital structure,and then,after we introduce the liquidity and volatility,we consider the impact of margin trading and securities lending on the intermediary variables,and the influence of margin trading and mediator variables on the capital structure.Next,because of the heterogeneity among firms,we classify the company by using the size of the company and the degree of shareholding concentration as the standard,in order to further study the effect of margin trading on the capital structure,etc.For the sake of ensuring the robustness of the empirical results,we select two ways,such as replacing the metric index and the propensity score matching(PSM)of the sample data.Finally,according to the empirical test results,the corresponding policy recommendations are proposed.The empirical research results show that,there is a significant negative correlation between margin trading and corporate capital structure.It means that after the listed company allows margin trading,its asset-liability ratio will decline.In the study of the intermediary variables,we find that margin trading is positively correlated with the liquidity of the securities market,and margin financing and the volatility of the stock market are negatively correlated.What's more,margin trading is still negatively correlated with the level of corporate capital structure.The outcome means that implementation of margin trading and securities lending will increase the level of market liquidity,and it will also reduce the level of stock volatility,which it is helpful to maintain the stability of the stock market.At the same time,the two intermediary variables do not affect the influence of margin trading on the capital structure,but only slightly reduce the impact.In the research of the firm heterogeneity,the result shows that the size of firms is negatively correlated with the effect of margin trading and securities lending.The size of equity concentration is also negatively correlated with the effect of margin trading and securities lending.The smaller the firm size is,the more dispersed the corporate equity is,the impact of margin trading and securities lending on corporate capital structure will be greater.At the same time,the results of the replacement metric index and PSM also indicate that the empirical results are robust.