Study On The Market Effect Of The New Securities Law On Enterprise Value

The Securities Law has been formally implemented for more than 20 years since July 1,1999,during which it has experienced many amendments.The Securities Law,on the other hand,has a long revision cycle.It was finally approved on December 28,2019 after the fourth reading,and formally implemented on March 1,2020.At the same time,the content of the Securities Law has undergone major changes in this round of amendments,such as vigorously implementing the reform of the registration system,strengthening the protection of investors,improving the quality of information disclosure and substantially increasing the cost of violations.The new Securities Law,as the "fundamental law" of the capital market,provides institutional guarantee for improving the regulatory environment of the capital market and improving the quality of listed companies.Therefore,it is of great significance to deeply understand the significant impact of the review and adoption of the new Securities Law on enterprise value for protecting the legitimate rights and interests of investors and promoting the stable development of the securities market.First of all,this paper takes Shanghai and Shenzhen A-share listed companies as the research samples,and uses the event study method to conduct an empirical study on the market effect of the new Securities Law on enterprise value.The results show that the average abnormal return rate of listed companies is significantly negative on the day of the approval of the new Securities Law,which indicates that the approval of the new Securities Law induces the decline of the enterprise value of listed companies.After replacing the return rate data and the normal return estimation model,the result is still robust.This paper holds that there are two reasons.First,the new Securities Law carries out the reform of registration system,and the regulatory authorities no longer make value judgments on the companies to be listed.Instead,they focus on the quality of information disclosure,allowing investors to make value judgments on their own according to the information disclosed by the listed companies.This change will increase investment risk,make it difficult for investors to adapt in a short period of time,lead to their flight from the market,and eventually induce the decline of enterprise value.Second,the new "Securities Law" to strengthen the quality of information disclosure requirements,significantly increase the penalties for violations.This is conducive to regulating the behavior of the securities market in the long run,but in a short time,it will lead to a sharp increase in the cost of information disclosure and violation of the cost of listed companies,and induce the decline of enterprise value.Then,this paper uses the regression analysis method to study the impact of three listed company characteristics,namely investor protection level,information disclosure quality and violation risk,on the market effect of the new Securities Law.The results show that the characteristics of investor protection level and information disclosure quality of listed companies can significantly alleviate the decline of enterprise value induced by the new Securities Law,while the characteristics of violation risk of listed companies can significantly aggravate the decline of enterprise value induced by the new Securities Law.Based on the above empirical results,this paper suggests: First,the current round of amendments to the Securities Law requires strengthening the ability to protect investors,improving the quality of information disclosure and raising the cost of violations.It is of great significance to regulate the behavior of the securities market and promote the steady development of the securities market.However,the legal construction should be gradual and take the actual situation of investors and listed companies into full consideration.Otherwise,investors will panic and the value of listed companies will fall.Second,listed companies should strive to improve their ability to protect investors and the quality of information disclosure,avoid illegal behavior,and enhance the ability to adapt to the changes in the securities market.So as to enhance the corporate image,attract investors attention,increase the value of the enterprise.Third,investors should improve their own investment capacity,adapt to the development of the securities market,so as to obtain greater investment income.