Capital Market Opening And Corporate Leverage Manipulation

In response to the impact of the 2008 financial crisis on the economy,the government introduced a series of economic stimulus packages,which,while improving the economy,also led to a continued steep increase in the leverage of micro enterprises,especially non-financial enterprises,and an increasing financial burden,which not only adversely affected the investment and financing decisions of companies,but may also lead to systemic financial risks.In response,China has been implementing a mandatory deleveraging policy since 2015,and companies may use off-balance sheet liabilities,nominal equity but real debt and other accounting tools to manipulate leverage for the purpose of improving external financing and meeting regulatory requirements.However,leverage manipulation does not really reduce a company’s leverage,but rather misleads management,investors and regulators in their decisions,further increasing the likelihood of financial risk and even systemic financial risk.In China’s current capital market,which is not fully efficient,companies have more opportunities to manipulate accounting information,so how to effectively regulate and accurately manage corporate leverage manipulation to prevent and mitigate systemic risks in the financial sector has become a major issue that needs to be addressed."The implementation of "Shanghai-Hong Kong Stock Connect" and "Shenzhen-Hong Kong Stock Connect" has had a significant impact on the operation and financial decision-making behavior of mainland listed companies.Therefore,this paper explores the relationship between capital market The contributions of this paper are: firstly,it explores the impact of the implementation of the "Land-Hong Kong Stock Connect" trading system on micro companies from the perspective of balance sheet information risk,broadening the research on capital market The contributions of this paper are: firstly,it explores the impact of the implementation of the "Land-Hong Kong Stock Connect" trading system on micro companies from the perspective of balance sheet information risk,broadening the research on capital market opening and providing empirical evidence to evaluate the practical effects of the "Land-Hong Kong Stock Connect",a two-way capital market opening policy,and further deepening capital market opening.It provides empirical evidence to support the evaluation of the practical effects of the "land-port" policy and the further deepening of capital market opening.Secondly,the relationship between capital market opening and corporate leverage manipulation is a useful addition to the existing literature on the governance of leverage manipulation,taking the implementation of the "Hong Kong-Land" trading system as a macro-level entry point.Third,it clarifies the pathways through which capital market opening affects corporate leverage manipulation,opens up the "black box" mechanism between the two,and provides an in-depth analysis of the differential effects of capital market opening on leverage manipulation in different contexts,offering new ideas for better governance of corporate leverage manipulation.and providing empirical evidence to evaluate the practical effects of the "Land-Hong Kong Stock Connect",a two-way capital market opening policy,and further deepening capital market opening.It provides empirical evidence to support the evaluation of the practical effects of the "land-port" policy and the further deepening of capital market opening.Secondly,the relationship between capital market opening and corporate leverage manipulation is a useful addition to the existing literature on the governance of leverage manipulation,taking the implementation of the "Hong Kong-Land" trading system as a macro-level entry point.Third,it clarifies the pathways through which capital market opening affects corporate leverage manipulation,opens up the "black box" mechanism between the two,and provides an in-depth analysis of the differential effects of capital market opening on leverage manipulation in different contexts,offering new ideas for better governance of corporate leverage manipulation.and corporate leverage manipulation based on the staggered event scenario of "Shanghai-Hong Kong Stock Connect" and "Shenzhen-Hong Kong Stock Connect".Based on a systematic review of the relevant literature on the economic consequences of capital market opening and the influencing factors of corporate leverage manipulation,this paper selects Shanghai and Shenzhen A-share listed companies from 2010 to 2020 as the research sample,and based on information asymmetry theory,signal theory,financing constraint theory and efficient market hypothesis,etc.,on the basis of theoretical analysis,empirically tests the relationship between capital market opening Based on theoretical analysis,the relationship between capital market opening and corporate leverage manipulation was empirically tested by building a double difference model.The findings show that capital market opening can significantly reduce the degree of leverage manipulation of the subject company,and the distinction between the means of leverage manipulation is found to be reflected in a decrease in the size of off-balance-sheet liabilities and nominal equity debt,and the findings still hold after a series of robustness tests such as parallel trend test,placebo test and propensity score matching.Further research finds that the dampening effect of capital market opening on corporate leverage manipulation is achieved by easing financing constraints and increasing information transparency,and that this effect is more pronounced among firms with high shortterm debt servicing pressures,firms in regions with low banking competition,firms with low audit quality and firms where institutional investors are transactional.At the same time,capital market opening significantly reduces firms’ future financial risk by discouraging leverage manipulation.Based on the empirical findings,this paper puts forward corresponding policy recommendations: adhere to the principle of gradual capital market opening without wavering,further relax the restrictions on trading quota and shareholding ratio;continue to deepen financial reform and innovation to enhance the ability of financial services to the real economy;improve the information disclosure system and further regulate the information disclosure behavior of listed companies;companies should pay attention to the financial risks lurking behind leverage manipulation and improve their capital structure through legal Companies should pay attention to the financial risks behind the manipulation of leverage,improve their capital structure through legal means and achieve their own high-quality development.The contributions of this paper are: firstly,it explores the impact of the implementation of the "Land-Hong Kong Stock Connect" trading system on micro companies from the perspective of balance sheet information risk,broadening the research on capital market opening and providing empirical evidence to evaluate the practical effects of the "Land-Hong Kong Stock Connect",a two-way capital market opening policy,and further deepening capital market opening.It provides empirical evidence to support the evaluation of the practical effects of the "land-port" policy and the further deepening of capital market opening.Secondly,the relationship between capital market opening and corporate leverage manipulation is a useful addition to the existing literature on the governance of leverage manipulation,taking the implementation of the "Land-Hong Kong" trading system as a macro-level entry point.Third,it clarifies the pathways through which capital market opening affects corporate leverage manipulation,opens up the "black box" mechanism between the two,and provides an in-depth analysis of the differential effects of capital market opening on leverage manipulation in different contexts,offering new ideas for better governance of corporate leverage manipulation.