Liquidity Commonality, Capital Structure And Debt Conservative Behavior

The conservative behavior of corporate debt is one of the frontier issues in the theoretical study of capital structure.In practice,there are many companies whose debt levels are far below the minimum predicted value of the mainstream capital structure theory,and even some companies have zero debt levels.This phenomenon is called "low leverage mystery" or "debt conservative behavior." At the same time,the 2007 subprime mortgage crisis in the United States led to the lack of liquidity in capital markets around the world,as well as the “thousand-share limit” phenomenon caused by the extreme liquidity depletion in my country in 2015,both of which are extreme phenomena caused by liquidity commonality.Among them,some studies have shown that the common problems of liquidity in my country’s stock market are more significant,but they have not received corresponding attention.Therefore,this article attempts to explore the impact of liquidity commonality on corporate capital structure and its mechanism of action,and further explain the conservative behavior of corporate debt from a new perspective.This article takes China’s A-share listed companies as a sample from 2000 to 2018,based on the market microstructure theory,studies corporate debt conservative behavior,and deeply analyzes the impact of liquidity commonality on corporate debt conservative behavior,and discusses liquidity commonality from a capital structure perspective The mechanism of debt conservative behavior.And further analyze the impact of bullish,bear market and liquidity commonality under different property rights on corporate debt conservatism.The study found that the liquidity commonality is positively related to debt conservative behavior,that is,the higher the liquidity commonality,the easier it is for companies to adopt debt conservative behavior and even prefer zero debt.Also.Upon further examination,it was found that under the different market conditions of the bull and bear markets,the positive impact of liquidity commonality on corporate debt conservative behavior during the bear market was significantly enhanced.Compared with state-owned enterprises,the impact of non-state-owned enterprises’ liquidity commonality on corporate debt conservative behavior has increased significantly.This article is based on the existing research on the relationship between the liquidity(level)of individual stocks and corporate finance,and explores the relationship between liquidity commonness and corporate debt conservative strategies.It is helpful to deepen the cross-study between the market microstructure and corporate finance,and improve the development of capital structure theory.It has practical guiding significance for the research on the influencing factors of debt conservative behavior of listed companies,capital structure optimization,and capital market system reform.