The Impact Of Capital Market Opening On The Cost Of Capital Of Listed Companies

In May 2020,the Central Committee of the Communist Party of China proposed for the first time to "build a new development pattern of mutual promotion of domestic and international dual circulation".The opening of the capital market is the only way under the "Dual Circulation" pattern.At present,the opening of my country’s capital market has entered the stage of two-way opening,and the two-way opening up is a major practice-the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect trading mechanisms were launched in 2014 and 2016 respectively.The current Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect trading mechanisms have been It has run for a long time and has high research value and sufficient research conditions.At the same time,reducing the capital cost of enterprises is still the focus of the "14th Five-Year Plan",and solving the financing difficulties and expensive financing problems faced by small and medium-sized enterprises is a hot topic repeatedly mentioned in the "Government Work Report" in recent years.Based on the above background,this paper attempts to explore the impact of the opening of the capital market on the cost of capital of enterprises.This will help to explore the "dual nature" of capital market opening and the macro-influencing factors of capital cost.This will promote the opening of the capital market to be more targeted,scientific and effective,and provide a better solution from the perspective of capital market opening for reducing the financing cost of enterprises.This paper sorts out the research status of the capital cost theory and the impact of capital market opening,summarizes and reviews the reality of my country’s capital market opening and capital cost,and combines the basic viewpoints of investor cognition hypothesis,liquidity hypothesis,and corporate governance theory.This paper puts forward the research hypothesis that the opening of the capital market will help to reduce the cost of capital by reducing the cognitive cost,and mainly through the external competition channels to reduce transaction costs and internal corporate governance to reduce the channel impact of normative costs.This paper conducts an empirical study on Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect as a "quasi-natural experiment" of capital market opening,and selects Shanghai-listed companies from 2009 to 2020 and Shenzhen-listed companies from 2013 to 2020 as samples.The Difference-in-Difference(DID)model is used to verify the changes in the capital cost of the target company before and after the implementation of the policy.This paper uses the transaction volume and the number of shareholders as the grouping basis to perform group regression to verify the impact mechanism of capital market opening on capital cost by affecting competition channels.This paper uses the ownership concentration and whether the two rights are separated as the grouping basis to carry out group regression to verify the impact mechanism of capital market opening on capital cost by affecting corporate governance.To sum up,this paper draws the following research conclusions:(1)Capital market opening events such as the implementation of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will effectively reduce the cost of capital;(2)Capital market opening events such as the implementation of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will reduce the cost of capital by increasing investor competition;(3)The opening of the capital market will reduce the cost of capital by improving corporate governance.This paper puts forward the policy suggestions as following:(1)Continue to promote the opening of the capital market and innovate and explore the opening mode;(2)Enrich and improve the existing open system,and fully learn from successful experience;(3)Strengthen cross-border supervision and law enforcement cooperation,and guide the formation of supervision synergy;(4)Consolidate the corporate governance structure of the company and improve the quality of information disclosure.