The Impact Of Stock Liquidity On Corporate Violations

Thanks to the improvement of the regulatory system and the improvement of the legal environment,my country’s capital market has developed rapidly,and the management level and governance capacity of enterprises have been greatly improved,but corporate violations are still common.According to wind statistics,in the whole year of 2020,a total of 1,419 companies in the A-share market were punished by regulatory agencies such as the China Securities Regulatory Commission,the China Banking and Insurance Regulatory Commission,and the stock exchange for violations.Violations will not only disrupt the order of my country’s financial market,but also hinder the health of the capital market.development,and may even bury hidden dangers to economic security.As an important part of the market microstructure,stock liquidity helps investors to trade stocks at low cost.Whether liquidity has an impact on corporate irregularities,this paper conducts an in-depth study.This paper takes the A-share listed companies in Shanghai and Shenzhen stock markets as the research object,makes a specific analysis from two aspects of theory and data,uses statistical software to clean the data,and finally obtains 17,403 observations for regression analysis,and obtains liquidity from a statistical perspective.It will increase corporate irregularities and deteriorate corporate governance.The impact mechanism between liquidity and listed company violations can be explored from the following aspects: First,highly liquid stocks will attract arbitrage traders who focus on short-term returns.In order to prevent stock prices from falling,management will take violations to whitewash performance Second,high-quality information disclosure will improve the company’s operating performance and the information content of the stock price,thereby alleviating the aggravating effect of liquidity on the violations of listed companies;third,high liquidity is conducive to the reduction and exit of major shareholders,The threat of shareholder exit can be used as an effective corporate governance mechanism.In addition,the supervisory role of independent directors on shareholders and management of listed companies,as well as the equity incentives for executives to bind the interests of shareholders and management,can effectively solve the problem of agency problems,improve the governance level of listed companies,and reduce violations of listed companies.At the same time,in order to overcome the endogeneity problem,this paper introduces the pilot program of refinancing securities launched in my country in 2013 as an external event shock,and uses the double-difference method to finally reach a consistent conclusion.Finally,based on the research results,this paper puts forward relevant policy recommendations from three aspects: strengthening stock liquidity management,guiding institutional investor behavior,and focusing on information disclosure supervision.