Research On The Real Economy Effect Of Equity Financing

Finance is the core of modern economy,and equity financing is an important source of financing for real economy.Since the reform and opening up,China's multilevel capital market system has been increasingly improved.By March 2020,there were3,808 A-share listed firms,and the scale of firm equity financing continued to rise.Although China has developed into the world's second largest economy,and facing many new problems and challenges in the new global economic and financial situation.It is urgent to further strengthen equity financing in the capital market to help transform and upgrade the real economy and improve its quality.Thus,it has become an important subject to deeply study how equity financing can better promote the high-quality development of micro enterprises and macro economy.In this paper,we in accordance with the "Macro(national and provincial level)—Micro(firm business performance,research and innovation,high quality development)—Policy Recommendations" logical train of thought to explore the specific influence of equity financing on the real economy development.In order to promote equity financing better serve China's macro and microeconomic toward high quality development,we provide targeted policy recommendations.Firstly,we deeply learning and understanding the relevant literatures at home and abroad,which lays the literature foundation for following research.Secondly,this paper studies the impact of equity financing on national economic development and the differential impact on provincial economic growth from the macro level,so as to form an overall view of the real economic effect of equity financing.Then,from the perspective of micro firms,this paper respectively explores the impact of equity financing on business performance,R&D and high-quality development of firms,and systematically studies the specific influencing mechanism and regulating factors.Therefore,this part mainly answers the questions of "what" and "why".Finally,based on the empirical results of this paper and the actual economic and financial development in China,some targeted policy suggestions are put forward,which actually answer the important question of "how to do" in the future.In the specific impact of equity financing on the macro level of real economy development,this paper studies the impact of equity financing on national economic growth by using TVP-SV-SVAR model,and finds that equity financing significantly promotes the growth of China's national economy and the development of three industries.From the perspective of the types of equity financing,although IPO financing and equity refinancing have different impacts on the growth of China's national economy and the development of the three industries,they all show significant positive impacts,which are getting stronger with the passage of time.From the perspective of provincial economic growth,the three classical empirical models all proved that equity financing significantly promoted the provincial economic growth in China,but had a greater positive impact on the economic growth of eastern provinces and provinces with lower degree of marketization.As firms are the cells of the national economy,the research on the real economy effect of equity financing needs to be carried out at the level of micro enterprises.(1)Firstly,based on the SGMM model,this paper studied the relationship between equity financing and business performance of listed manufacturing companies in China,explored the important intermediary function of firms' expansion of reproduction and R&D innovation mechanism,and investigated the regulating role of independent director system and asset-liability ratio.It is found that equity financing has a significant positive correlation with business performance,and there is no obvious ownership or regional heterogeneity.Expanding reproduction and R&D innovation are important driving forces for development.Equity financing can promote firms to expand production scale and increase R&D investment to improve their business performance.As an important part of corporate governance,the independent director system helps to strengthen the positive effect of equity financing on corporate operating performance.The level of asset-liability ratio restricts the optimal allocation of enterprise capital,so it weakens the positive effect of equity financing on firm operating performance.(2)Innovation is the driving force for firms to maintain their competitive advantages and achieve high-quality development of the national economy.This paper studies the influence of equity financing on the innovation effect of Chinese a-share high-tech listed firms.It is found that both input and output of firm innovation increase with the increase of equity financing,and this positive effect mainly exists in non-stateowned firms and non-group firms.Equity financing is mainly through the increase of money supply and small and medium shareholders incentive and supervision to improve the investment in firm innovation;The level of asset-liability ratio is an important factor restricting the capital arrangement of firms.The firms with higher asset-liability ratio weaken the promotion effect of equity financing on firm innovation investment.(3)Promoting high-quality development of firms is the key to realizing high-quality development of the national economy and an important way to meet people's ever-growing needs for a better life.This paper selects representative indicators from the aspects of firm quality,efficiency,dynamic change and corporate governance,and constructs firm high-quality development index by using principal component analysis.Then,based on the Two-way FE model,the relationship between equity financing and high-quality firm development is studied,and the mediating effect and regulating effect of firm R&D investment and independent director system are explored.The study found that equity financing was significantly positively correlated with the high-quality development of firms,and there was no obvious regional heterogeneity.As innovation is the primary driving force for development,equity financing can encourage firms to increase R&D investment to improve their highquality development ability.As an important part of corporate governance mechanism,the independent director system significantly strengthens the positive influence of equity financing on the high-quality development of state-owned firms.The conclusion of this paper has a strong policy orientation,which not only provides some enlightenment to the optimization of financing structure at the macro level,but also provides an empirical basis for micro enterprises to choose the appropriate sources of funds.The core idea is that equity financing plays an important role in promote the development of national economy,improve firm management performance and innovation ability,promote firm development quality.Thus,to establish the Chinese characteristic socialist modernization power,we should give full play to the equity financing in the macro to micro huge promotion effect in the real economic activity,the real service for the real economy transformation and upgrading of equity financing funds,micro firm and macro economy two levels high quality development.In terms of specific policy suggestions,this paper believes that the following aspects should be implemented: We should improve the basic system of capital market and broaden the channels for equity financing;Encourage the development of direct financing and increase the proportion of equity financing in the real economy;Increase the supply of innovation resources and enhance the capacity of the real economy for independent innovation;Unswervingly encourage and support the innovative development of the non-public sector of the real economy;Improve the independent director system and the level of corporate governance;Vigorously develop equity financing and maintain a reasonable leverage ratio for the real economy.