Equity Financing Regulation?Corporate Governance And Firm Value

Equity financing regulation in China's capital market is prevalent and widespread.However,there have been very few studies on whether and to what extent the control of equity financing has affected the microeconomic behavior of enterprises and the economic consequences.Using the parallel panel data of A-share listed companies from the year 2001 to 2015,this paper chooses the SEO policy regulation,the approval time of stock issuance,and the passing rate of the SEO to show the relation and the mechanism between the equity financing regulation and microeconomic behavior of enterprises and the economic consequences.This paper finds that the equity financing regulation has significantly negative effects on the leverage adjustment speed,investment efficiency and corporate asset yields as well as the operating income growth of corporates.And the negative impact of the equity financing regulation is more notable to the companies with higher external financing dependence.Further tests also shows that the impact of equity financing regulation on the microeconomic behavior of enterprises and the economic consequences is not only due to its inhibition of corporate equity financing,but also the debt financing,and ultimately undermines the corporate performances.Moreover,when the firm belongs to the SOEs or the information-asymmetry is higher,the negative impact of equity financing regulation is greater.This paper provides new evidence for the research on how the equity financing regulation affects the microeconomic behavior of enterprises and helps to enhance people's understanding of how finance affects the real economy.