Research On The Influence Of Margin Trading And Short Selling On The Corporate Capital Structure

On March 31,2010,China’s stock market formally began to implement margin trading and short selling system,adding short selling mechanism to end the unilateral trading mode.At present,this system has become one of the mainstream trading systems in China’s stock market.But there are still some hidden risks in capital structure,such as high proportion of corporate debt and large financial leverage.Margin trading and short selling system can not only help to improve the structure of China’s capital market,enhance investors’ investment and market efficiency,but also have an important impact on the level of micro-enterprises.This paper studies the impact of this system on capital structure under the managerial decision-making behavior,and uses the data of Chinese companies from 2007 to 2020 as samples,the DID model is used to explore the relationship between the system and corporate capital structure.Through the intermediary effect test,this paper studies in detail the influence channel of the system on the capital structure from the perspective of management decision-making,and from the perspective of heterogeneity,it sorts out the differences in policy effects..The results show that the asset-liability ratio decreases significantly and the capital structure is optimized when the company becomes the subject of margin trading and short selling system.From the perspective of management decision-making,there are two impact channels: First,margin trading and short selling system amplifies the negative impact of corporate financial risk and urges managers to reduce debt financing.Secondly,margin trading and short selling system increases the cost of debt financing,which reduces the manager’s choice of debt financing and optimizes the capital structure of the company.For different enterprises,the function of margin trading and short selling system is different,and the effect of margin trading and short selling system on optimizing corporate capital structure is more significant in smaller enterprises and non-state-owned enterprises.Finally,the paper uses propensity score matching method to exclude the sample Selection bias and change the sample interval for the robustness test,which improves the results’ reliability.At the end,this paper puts forward policy recommendations to continue to expand the range of short selling,gradually expand the margin trading mechanism and improve the rule and regulation,in order to make margin trading and short selling system better serve China’s capital market and microenterprises.