Security regulations, access to capital markets, and firm performance: Evidence from China
研究中国证监会要求企业达到盈利基准才能进行二次股权融资的监管成本，发现受监管影响的企业（高外部融资需求但盈利不达标）绩效显著更差，且监管松紧变化时市场反应相反。
Abstract This study explores the cost of security regulations in China, where firms are required to meet a certain profitability benchmark before applying for permission to raise more equity via secondary equity offerings (SEOs). Using a difference‐in‐differences setting, we show that firms affected by the regulation (i.e., firms with high external financing demands (EFD) but profitability lower than the regulatory requirement) significantly underperform their counterparts, while unaffected firms do not. The affected firms’ performance decline increases (decreases) when the requirement of profitability is more (less) restricted. Consistently, the three‐day cumulative abnormal return (CAR) of firms with high EFD is significantly negative (positive) when the regulation is tightened (loosened). Our study provides evidence on how the cost of regulation affects companies that have growth opportunities.