A Study On The Influence Of Deregulation Of Short-selling On The Corporate Financial Constraints

On March 31,2010,China's securities market officially started margin trading.Since then,the state of "unilateral market" has ended,which also marks the formal entry of short selling mechanism into China's capital market.Up to now,it has been 9 years of development.As of September 2019,the number of underlying stocks has reached 950,and the balance has reached 989 billion yuan.With the increasing number of enterprises entering the scope of short selling and the increasing number of market participants,margin trading system has a certain impact on the capital market and corporate behavior.Domestic scholars mostly focus on the capital market.It is found that the short selling mechanism has a positive effect on the capital market,such as stabilizing the price fluctuation and improving the efficiency of stock pricing.In recent years,the financing behavior and financing ability of enterprises have gradually attracted the attention of scholars at home and abroad,especially the phenomenon of financing constraints.As an important part of the economic activities of enterprises,financing not only affects the development and progress of enterprises,but also relates to the overall operation of macro-economy.At the same time,easing the financing constraints of enterprises is also a necessary measure for enterprises to upgrade,transform and get better development.According to the priority financing theory,there is a priority arrangement in the financing mode of enterprises.When the internal financing of enterprises is difficult to meet their investment needs,enterprises will seek external financing.In an imperfect market,market friction and information lag make external investors in information disadvantage,so investors will require a higher risk premium for risk consideration,which makes the external financing cost higher than the internal financing cost,and then makes enterprises face financing constraints.The existing literature shows that the short selling mechanism allows investors to "vote with their feet" in the system,and the opportunity to profit from the decline of the stock price of the enterprise encourages the short selling investors to actively mine the negative information of the enterprise,plays an external supervision role on the enterprise management,and restricts their self-interest behavior and opportunistic behavior,which is an effective corporate governance mechanism.And its information governance effect can improve the information environment of enterprises,improve the quantity and quality of information disclosure,and effectively reduce the degree of information asymmetry.Therefore,from the perspective of corporate governance effect and information governance effect of short selling mechanism,this paper studies the mitigation effect of short selling mechanism on financing constraints of listed companies,and verifies its transmission path.This paper first uses the normative research method to analyze the problems based on the information asymmetry theory,the signal transmission theory and the principal-agent theory,and takes the analysis of the development status of the short selling mechanism as the practical basis,and finally uses the empirical research method to take the A-share listed companies in Shanghai and Shenzhen Stock Markets between 2008 and 2018 as the research sample and the financing of the domestic capital market's step-by-step expansion Taking the opportunity of "quasi natural experiment" of securities lending system,this paper empirically tests the relationship between short selling mechanism and cash flow sensitivity of enterprises by using double difference model,and analyzes its transmission path.The empirical results show that:(1)after the enterprises enter into the subject of margin trading,the short selling control is relaxed,which effectively reduces the cash cash flow sensitivity of enterprises,that is,the financing constraints of enterprises are relieved;(2)this paper then tests the difference between financing transactions and margin trading,and finds that the impact of financing transactions on the financing constraints of enterprises is not significant,while the impact of margin trading is significant.(3)By using the same method,the samples are divided into two groups according to the degree of information asymmetry.Empirical results show that the effect of short selling mechanism on corporate financing constraints is more significant in the group with high degree of information asymmetry,that is,short selling mechanism can alleviate corporate financing constraints by reducing the degree of information asymmetry,which further proves that short selling mechanism has certain information governance effect.(4)This paper divides the sample into high governance level group and low governance level group.The research finds that in the low governance level group,the short selling mechanism can alleviate the financing constraints by improving the corporate governance level,which further proves that the short selling mechanism has certain corporate governance effect.Finally,this paper gives some constructive policy suggestions based on the empirical results:(1)listed companies should attach importance to the short selling mechanism,actively cooperate to play its governance effect,improve the market environment,and improve the level of corporate governance.(2)The capital market should strengthen supervision,keep the transparency of the market,give full play to the positive role of short selling mechanism,and improve the stability and effectiveness of the market.