Stock Price Movements And The Listed Company's Fixed Capital Investment Research

Since 1990's, more and more scholars have researched whether and how stock market prices influence on business fixed investments in western economics and finance academic community. In the early 1990's, this problem was studied rough by the empirical study method for aggregating data. But since 2000, it has been researched elaborately on microcosmic level. Many students researched it from the different points of view by the different methods. And some papers were issued in top academic magazines such as AER, QJE. So it becomes an interesting new topic in economics and finance in western academic community. But our scholars in China have known it little.There are many limitations in the references related that problem. For example, the empirical studies in those papers focused on developed stock markets, and ignored emerging stock markets. Those models for empirical studies are not suitable for resolving that problem, etc.Stock market and business fixed investment are the very important components in the modern economy system. Once we understand whether and how stock market influence business fixed investment, we will get more details about what stock market does for real economy activities. A-share market in China is getting more and more important because its size and the number of its listed companies are going up increasingly. Therefore, it will be very important to research on whether and how the changes of stock prices influence the business fixed investments of listed companies in A-share market. It will not only improve the related-problem study, but also provide a new window through which the effect of A-share market on real economy activities in China can be analyzed soundly. So this dissertation decomposes that basic problem into two sub-problem from two viewpoints. The first is whether stock price changes influence the business fixed investments of A-share companies from equity financing mechanism, and the second is whether stock price changes influence the business fixed investments of A-share companies from information mechanism.This dissertation researches carefully the two problems by models deducing and empirical analysis which is used more frequently, and improve related study. During the course of empirical study, this dissertation follows the strict empirical process, that first step is setting up hypothesis, then establishing empirical investment equation, last designing testing method and estimating empirical equation. And robustness test will be done. Thus the conclusions of this dissertation should be reasonable and scientific. This dissertation provides some significant results as follows. On the one hand, some research methods have been improved according to the shortcomings of existed papers. For example, designing new empirical analysis method for testing equity financing mechanism from the change of whole stock price, setting up better empirical investment model, improving the measurement of non-fundamental Tobin's q, etc.On the other hand, the following meaningful conclusions can be drawn:1. According to equity financing mechanism, the changes of stock prices have positive effect on the business fixed investments of A-share companies in China stock market. In detail, the following further findings can be gotten:(1) While internal cash flow and bank loan keep unaltered, stock price changes during the bull market from 1999 to 2000 have less effect on the business fixed investments of A-share companies than that of bear market in 1998, because bull market ease the restriction of equity financing;(2) During the course of stock market transformation from bull market to bear market, high bank-dependent firms show bigger change in the sensitivity of corporate investment to stock price than low bank-dependent firms;(3) Through equity financing mechanism, the changes of non-fundamental stock prices have positive effect on the business fixed investments of A-share companies; the higher equity-dependent, the more sensitivity in corporate investments to non-fundamental stock prices; the lower stock valuation, the more sensitivity in corporate investments to non-fundamental stock prices; the private listed companies rank highest level, second local state listed companies, last central state listed companies according to the sensitivity of corporate investments to non-fundamental stock prices.2. Information mechanism is ineffective in China A-share market, that is the changes of stock prices have no effect on A-share companies' fixed investments by information mechanism; the reason is that the stock prices of A-share companies have no information content about future corporate operating performance and future macroeconomic situation.Therefore, it is believed that in China A-share market the stock prices changes may influence the business fixed investments of listed companies through equity financing mechanism, not through information mechanism.According to the research from this dissertation, it is not true that China A-share market is completely speculative and nothing with real economic activity, because it may affect A-share companies fixed investments through equity financing mechanism, furthermore may influence real economy activity. But China A-share market does not exert expectant role by information mechanism, thus provide nothing about information related to productive investment decision. It is a defect for China A-share market contrasted with U.S. stock market where information mechanism is effective by Chen et al.(2007) paper.So our government should be prudent while to intervene stock market, avoid doing harm to corporate production from improper policy, because government intervention may affect listed companies' fixed investments through equity financing mechanism; meanwhile, our government should actively develop expectant information role of A-share market.