The Research On The Impact Of Shanghai/Shenzhen-Hong Kong Stock Market Connect On The Investment Efficiency Of Companies

In recent years,in order to promote the opening of capital markets,China has taken various measures,for instance QDII,QFII and RQFII.In 2014,Shanghai-Hong Kong Stock Connect was established,which broke through the barriers on the opening of capital markets,including trading restrictions and one-way capital flows.Subsequently,the Shenzhen-Hong Kong Stock Connect was launched in 2016 to further promote stock market connectivity.As a channel of financing,the ultimate goal of the Shanghai/Shenzhen-Hong Kong Stock Connect is to serve the development of the real economy.However,the company's high efficiency operation investment is the microcosmic manifestation of the economy high quality development.Therefore,this paper takes the Shanghai-Hong Kong Stock Connect that implemented on November 17,2014 and the Shenzhen-Hong Kong Stock Connect that implemented on December 5,2016 as the quasi-natural experiment,and uses the difference-in-difference model to examine the impact of the Shanghai/Shenzhen-Hong Kong Stock Connect on the investment efficiency of companies.The conclusion is that after the implementation of the Shanghai/Shenzhen-Hong Kong Stock Connect,the target company's non-efficient investment level is lower than the non-target company,which means the investment efficiency of the target companies have been improved.Then,this paper conduct a channel test from the perspective of stock liquidity,finds that after the Shanghai/Shenzhen-Hong Kong Stock Connect was implemented,a large number of foreign investors enter theA-share,which enhances stock liquidity,as stocks were traded more frequently.Thus higher stock liquidity can improve corporate governance,increase stock price informativeness or alleviate the financing constraints which could enhance the investment efficiency of companies.In addition,the cross-sectional difference test is carried out from three aspects of corporate governance,stock price informativeness and financing constraints,as a result,the mainly conclusion exists in the companies with poor corporate governance,low stock price informativeness and strong financing constraints.Finally,to ensure the reliability of the research conclusion,the robustness tests of parallel trend,placebo and propensity score matching are conducted.Based on the above conclusions,this paper puts forward four suggestions to consolidate and strengthen the economic effect brought by the implementation of the Shanghai/Shenzhen-Hong Kong Stock Connect.The four suggestions are as follows:strengthen the guidance and education of investors,improve the quality of information disclosure of listed companies,strengthen the supervision and incentive of overseas investors,ease the threshold for non-state-owned companies to raise capital by listing on the stock market.