Stock Price Crash Risk,board Networks And Financing Constrains

At present Chinese enterprises have problems of financing difficulties and financing Expensiveness.Therefore,the issue of financing constraints is a common problem faced by enterprises in the process of operation and development.It is of great theoretical and practical value for the study of financing constraints in emerging market countries including China.To this end,the theoretical community studies the financing constraints of enterprises from the perspectives of financial development,banking intermediation,monetary policy,political relations,institutional investors,media monitoring,etc.,but few literatures study the financing constraints of enterprises from the perspective of stock price collapse risk and director network.This article combines the knowledge of finance,sociology and corporate finance to explore the relationship between stock price crash risks,director networks,and financing constraints.Based on the domestic and foreign literatures related to stock price collapse risk,director network and financing constraints,according to agency theory,overconfidence theory,resource dependence theory,reciprocity theory and information asymmetry theory,combining present Chinese social context,this paper proposes theory analysis and empirical research framework of the stock price collapse risk,director network and financing constraint.Using samples of A-share listed firms In SSE and SZSE during the period of 2003-2017,This paper uses panel regression to test the impact of the stock price crash risk and board networks on financing constraints,and probes into whether board networks can mitigate the negative impact of stock price crash risk on financing constraints.The empirical results show that:(1)stock price crash risk indeed intensifies the financing constraints of enterprises.The stock price crash risk will increase the company's information risk and default risk.It is difficult for investors to accurately assess the future investment risk of the company.It will require higher risk compensation or more stringent financial contract terms,which will increase the difficulty of financing.(2)board networks can alLeviate the financing constraints of enterprises.The directors' network through information transmission,trust building and reputation mechanism reduces information asymmetry between enterprises and investors,reduces transaction costs,and alLeviates corporate financing constraints.(3)board networks can mitigate the negative impact of stock price crash risk on financing constraints to some extent.The above conclusions are still robust after replacing the measurement index of the explained variables.After considering the endogeneity problem,we use dynamic panel system GMM test,instrumental variable method and Heckman two-stage regression to further test the conclusions of this paper.The empirical results also support the above conclusions.This paper not only enriches the research regarding the economic consequences of the stock price crash risk and board networks,but also expands the literature on the influencing factors in financing constraints,and deepens the interdisciplinary research in finance,sociology and corporate finance.The research conclusions have certain reference value for reducing information asymmetry and mitigating agency conflicts,which is conducive to reducingfinancial market friction,beneficial to the optimal distribution of resources,and promoting the benign development of the credit system,thus contributing to the healthy development of financial markets.