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Can implementing the new securities law mitigate corporate financial resource mismatch?

Author

Listed:
  • Li, Yihao
  • Chen, Jierong
  • Wang, Jian

Abstract

Financial resource mismatch is a significant obstacle to a nation's high-quality development. Establishing well-performing financial systems can help with efficient financial resource allocation, reduce financial resource mismatches, and promote economic health development. This paper explores the causal relationship between implementing the new Securities Law, a representative of capital market legalization, and enterprises' financial resource mismatch from 2015 to 2023. By employing difference-in-differences, this paper demonstrates how implementing the new Securities Law can significantly reduce enterprises' financial resource mismatch. The inhibitory effects are mitigated by reducing financial constraints and strengthening corporate governance capabilities. Moreover, enterprises' internal control quality and institutional investor ratio result in heterogeneous effects.

Suggested Citation

  • Li, Yihao & Chen, Jierong & Wang, Jian, 2025. "Can implementing the new securities law mitigate corporate financial resource mismatch?," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    • Handle: RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003576
    DOI: 10.1016/j.irfa.2025.104270
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