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Does the liberalization of stock market optimize firm's debt? Evidence from a policy experiment in China

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  • Yi, Yunxin

Abstract

This paper studies the impact of capital market opening on firm's financing in a typical developing market, China. We introduce the policy shock of China-Hong Kong Stock Connects to examine the mismatching between firms’ debt and investment. Our results show that the opening of capital market significantly reduces the mismatch between firms’ debt and investment. One possible mechanism is that the increase of information transparency with the China-Hong Kong Stock connects, which is confirmed by the moderating role of analyst coverage on the main effect. These findings enrich our understanding on the economic consequences of the stock market liberalization.

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  • Yi, Yunxin, 2023. "Does the liberalization of stock market optimize firm's debt? Evidence from a policy experiment in China," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007675
    DOI: 10.1016/j.frl.2023.104395
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    References listed on IDEAS

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    Cited by:

    1. Hu, Xiaoxue & Li, Dongxu & Wang, Jingni, 2024. "Green-selecting: Foreign institutional ownership and corporate green practices," Finance Research Letters, Elsevier, vol. 62(PB).

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