The Impact Of Local Government Debt On Corporate Risk Taking

At the beginning of 2020,the COVID-19 pandemic has swept across the world,inflicting a huge impact on the world economy.With the implementation of targeted anti-epidemic and dynamic zero clearance policies,local governments have increased fiscal expenditure in the field of public health.Meanwhile,the central government has further compressed fiscal revenue by implementing a new round of "tax and fee reduction" policies,resulting in an expanding fiscal deficit.To ease the financial pressure on governments at all levels,the central government has issued 1 trillion yuan of special government bonds and more special bonds for local governments.This has led to another expansion of local government debt.In the market economy,the enterprise risk-taking behavior vividly shows the profit-seeking of capital.The concept of risk taking not only includes decision-makers’ subjective attitude towards high-risk projects,but also reflects an enterprise’s objective ability to bear the loss caused by project failure.High willingness to take risks means that enterprises actively invest in high-risk projects and realize capital appreciation and sustainable development in the face of constant challenges.At the same time,enterprises’ risk taking behavior also promotes technological progress and technological innovation,and promotes macroeconomic growth.The government has played a huge role in China’s economic development,and the influence of government behavior on other economic organizations is also extremely complex.This paper makes an in-depth study of the relationship between the expansion of local government debt and the level of enterprise risk taking,expands the research on the economic effect of the expansion of local government debt and the influencing factors of enterprise risk taking at the theoretical level,and provides scientific basis and policy suggestions for local governments to control debt risks and regulate the process of issuing bonds at the practical level.This paper selects the observation interval from 2011 to 2019,calculates the standard deviation of the net interest rate(ROA)of A-share listed non-financial enterprises during the rolling observation period,and takes it as an indicator to measure the level of enterprise risk taking.According to the registered address of A-share listed non-financial enterprises,the scale of government debt in the corresponding year and region is matched.This paper examines the relationship between local government debt and corporate risk taking and its mechanism by constructing fixed effect model,intermediate effect model,moderating effect model and heterogeneity test.The results show that:(1)the expansion of government debt will reduce the level of enterprise risk taking.(2)The expansion of government debt enhances the external financing pressure of enterprises by crowding out the financing channels of enterprises,thus reducing the level of enterprise risk taking.(3)The quality of corporate information disclosure plays a moderating role in the relationship between government debt and corporate risk taking.(4)Compared with state-owned enterprises,the expansion of government debt has a more significant impact on the level of risk taking of non-state-owned enterprises.By changing the observation period length of enterprise risk-taking level and changing the measurement method of enterprise risk-taking level,the author conducts robustness test.The empirical results also support the main conclusions of this paper.