Abstract
Based on the theoretical analysis of financing constraints and stock price volatility, the hypothesis of “corporate financing constraints inhibiting corporate stock price volatility” is proposed. After data cleaning, the cross-sectional data based on A-share was used to make an empirical analysis of the relationship between financing constraints and stock price volatility of listed companies in 2018 through regression model. The study found that when companies relax financing constraints, due to widespread overinvestment, the stock price of companies will fluctuate more. In addition, we have shown that by replacing the return of financing constraint indicators and the regression of subsamples based on enterprise size, market type and ownership, the conclusion of the study is more robust. The research reveals the mechanism of the impact of financing constraints on the volatility of corporate stock prices. The conclusions have practical significance for investors, corporations and relevant regulatory authorities.
Highlights
IntroductionWhether in theoretical research or in practice, people have long paid attention to the fluctuation of stock prices
The fluctuation of stock prices is an eternal topic in the capital market
Based on the annual data of Shanghai and Shenzhen A-share listed companies in 2018, this paper studies the relationship between stock price volatility and financing constraints of listed companies
Summary
Whether in theoretical research or in practice, people have long paid attention to the fluctuation of stock prices. In most cases, this concern views stock price fluctuations as a risk and as a direct cause of losses to market participants. Stock price fluctuations have a positive correlation with corporate financing constraints. This article studies the impact of financing constraints on the fluctuation of corporate stock prices from the perspective of corporate over-investment, in order to study the research perspective in this field. This article uses the data of A-share non-financial listed companies in Shanghai and Shenzhen in 2018 to empirically analyze the impact of financing constraints on the fluctuation of corporate stock prices. The second part is the literature review, the third part is the research design, the fourth part is the empirical test and interpretation, the fifth part is the robustness test, and the conclusion part
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