The Impact Of Capital Market Opening On The Financing Costs Of Chinese Construction Companies

The basic purpose of my country’s establishment and development of the capital market is to facilitate the financing and investment of enterprises,so as to promote economic development through financial development.The “Mainland-Hong Kong Stock Connect”mechanism implemented in phases in 2014 not only improves the liquidity of funds between the mainland and overseas,but more importantly,realizes the rules,mechanisms,and supervision of the mainland stock market and the Hong Kong stock market.The gradual integration of regulations and other aspects is conducive to the long-term development of my country’s capital market and economy,and is of great significance in the course of my country’s capital market opening up.At present,construction companies are facing the deterioration of the financing environment caused by the decline in the industry’s prosperity,the slowing of income growth and the poor return of cash,and the financing costs of construction companies are under upward pressure.On the other hand,construction companies have determined that financing needs are relatively strong from the characteristics of the industry.Driven by issues such as labor difficulties in the industry and government policy constraints,construction companies are under great pressure to transform into prefabricated buildings,leading to further growth in capital expenditures and financing needs of construction companies Therefore,it is urgent to reduce financing costs for construction companies.This article uses the “Mainland-Hong Kong Stock Connect” as a quasi-natural experiment,uses the 2012-2020 A-share listed construction companies as a sample,and analyzes the current situation of China’s capital market opening and construction enterprise financing costs on the basis of theoretical research,and builds a full-sample asymptotic double-difference model on the basis of theoretical research and current situation analysis to systematically explore the capital market The impact of opening up on the financing costs of construction companies.The study found that after the opening of the “Mainland-Hong Kong Stock Connect”,the cost of equity financing of construction companies has been significantly reduced,while the cost of debt financing has not been significantly reduced.Further analysis of heterogeneity shows that after the opening of the “Mainland-Hong Kong Stock Connect”,the cost of equity financing for construction state-owned enterprises has been reduced more significantly,and the cost of equity financing for companies with low asset-liability ratios has been reduced more significantly.Based on this conclusion,this article puts forward relevant policy recommendations: at the macro level,the quota and scope of the underlying stocks should be gradually liberalized;the transaction costs of the “Mainland-Hong Kong Stock Connect” should be reduced.At the micro level,it is suggested that construction companies should give priority to equity financing,and focus on reducing the leverage ratio of construction companies.