Does The Northward Shareholding Of Hong Kong Capital Decrease The Cost Of Equity Capital?

In recent years,the CPC Central Committee and the State Council have really concerned about the financing of enterprises.Xi Jining,general secretary of the CPC,pointed out direct financing should be focused on an important position at the 2018 financial conference.Academia has always concerned about the refinancing cost of common shares by listed companies,and Xiamen University first formed such a cost of equity capital.How should listed companies reduce the refinancing cost of common shares?Does the opening up raise the cost of equity capital?Does the disregard equity governance damage the cost of equity capital?The cost of equity capital is close to the cost of bond financing and even forms an upside down link,which is beneficial for companies to issue stocks or avoid issuing bonds.So does the northward shareholding of Hong Kong capital reduce the cost of equity capital?This paper selects panel data of A-share listed companies since the northward shareholding of Hong Kong capitl,and measures the cost of equity capital through the discount method of residual income and the discount metihod of simplified income.After the econometric tests such as principal regression analysis,instrumental variable method,cross-robustness test,correcting sample selection errors,adjustment of sample size range,further strict assumptions,intermediary effect test,mechanism endogenous feedback and so on,this paper finds that the empirical test and the theoretical analysis on the study are mutually corroborated.This paper finds that the northward shareholding of Hong Kong capitl indeed reduces the cost of equity capital.This finding can not be overturned,which is based on the two-stage least squares estimation using two instrumental variables at the same time.This paper finds that the northward shareholding of Hong Kong capitl can reduce the cost of equity capital by promoting cash dividends;The northward shareholding of Hong Kong capitl can also reduce the cost of equity capital by improving the level of information disclosure of listed companies;The northward shareholding of Hong Kong capitl can also reduce the cost of equity capital by reducing the financial risk of listed companies.The above mediation can not be overturned by adding the estimation of two-stage least squares method additionally.This study is helpfol for corporate governance to understand the role of equity structure distribution,investor relations,corporate governance and foreign strategic investment in promoting equity financing,This study is helpful for national governance to understand the role of capital account expansion and opening in promoting equity financing from a micro perspective.In this paper,the IV-PSM-DID method is invented to enhance the persuasiveness of the discussion on the exclusive constraints of tool variables,to ensure the efficiency of the two-stage least square method.This paper suggests that the state and the corporate governance should work together to seek lower cost of equity financing for listed companies under the framework of four policy recommendations at the end of this paper,and we should make more efficient to participate in 100 billion market about secondary public offering.This study shows that it is of great significance for the financial work and economic progress of the mainland to firmly support the great practice of "one country,two systems" and maintain the long-term prosperity and stability of Hong Kong society.