Industrial Policy And Stock Liquidity

The industrial policy represented by the five-year plan is an important measure in the construction and improvement of China’s national economic system.It guides the direction of national industrial development to promote the transformation and upgrading of industrial structure,and further promotes the healthy and sustainable development of the economy and society.The five-year plan usually clearly points out the industries that will be supported and encouraged by the government in the next five years,which play an important role in the allocation of market resources and the survival and development of microeconomics entities,and are also the hot topics of the three circles of "politics,education and business" in China.The report of the 20th National Congress of the Communist Party of China pointed out that we should improve the functions of the capital market and increase the proportion of direct financing.Good liquidity can not only make the capital market better play its various functions,improve its operation quality and efficiency,but also boost investor confidence,prevent sharp fluctuations in the capital market price,and ensure the normal operation of the financial market.The liquidity of individual stocks organically constitutes the liquidity of the entire capital market.The stocks with high liquidity are more active and competitive in the capital market,which enables the corresponding enterprises to occupy certain advantages in direct financing.Industrial policy is an economic signal released by the government.Its differentiated attitude towards various industries actually implies the national strategic orientation of industrial development,which gives new development impetus to enterprises in relevant industries.So,will the support of industrial policy affect the capital market performance of enterprises in relevant industries? This is a question worthy of in-depth discussion.Therefore,after manually collecting and sorting out the policy information of the "five-year plan" involved in the period from2011 to 2021,this paper constructs a dummy variable of industrial policy.From the perspective of stock liquidity of micro-enterprises,it studies and analyzes the impact of China’s industrial policy on stock liquidity through qualitative and quantitative methods,and explores its specific impact channels.At the same time,it carries out heterogeneity analysis and further economic consequences test,Finally,several methods are used for robustness test.The main conclusion of this paper are :(1)When other conditions be equal,the support of industrial policy will positively promote the stock liquidity of supported enterprises,and this conclusion has been confirmed in multiple linear regression and double difference estimation;(2)The support of industrial policy mainly promotes the improvement of enterprise stock liquidity through increasing the attention of analysts,improving the information content of stock prices and enhancing enterprise value;(3)The impact of industrial policy support on stock liquidity varies among enterprises with different characteristics and under different external conditions: industrial policy support significantly improves stock liquidity for enterprises in the growth and maturity stages,as well as enterprises located in the eastern and central regions of China.However,for enterprises in the recession stage and enterprises located in the western region of China,this impact is not significant.At the same time,the positive promotion effect of industrial policies on the stock liquidity of supported industries is significant in bull market conditions,but not significant in bear market conditions.(4)The results of further research indicate that industrial policies can further reduce the equity financing costs of enterprises in supported industries by promoting increased stock liquidity,which is conducive to their direct financing in the stock market;The positive promotion effect of industrial policy support on the stock liquidity of related enterprises exists in the short and medium to long term,but tends to weaken in the medium to long term.Based on the above conclusions,this article finally proposes some reasonable suggestions on how to achieve efficient coordination between government industrial policies and the capital market.Studying the impact of industrial policies on capital market performance from the perspective of stock liquidity can make the research content of economic impact of industrial policies and influencing factors of stock liquidity more abundant.What’s more,it can help us comprehend the contact between government and capital market better.It also provides some inspiration for the formulation of government policy,the development and construction of enterprises and the investment management of investors.