The New Asset Management Regulation and Shareholder Payout Policies of Private Firms: Empirical Evidence from the Financing Constraint Channel
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Keywords
the New Asset Management Regulation, stringent financial regulation, private firms, cash dividends, share repurchases
Abstract
The issuance of the New Asset Management Regulations in 2018 aimed to prevent systemic financial risks. However, it objectively creates a financing shock for private enterprises that have long relied on non-standard financing channels. This article is based on the introduction of the new regulations on asset management. According to the sample of Chinese A-share listed companies from 2013 to 2024. Take private enterprises as the processing group and state-owned enterprises as the control group. The double difference model is used to empirically test the impact of strong financial supervision on the payment behavior of shareholders of private enterprises and its inherent mechanism. The study found that the new regulations on asset management reduce the probability of shareholder payment of private enterprises. After the implementation of the policy, the probability of cash dividends or active share buyback by private enterprises has decreased by 7.7 percentage points compared with that of state-owned enterprises. Mechanism test shows that the above effects are gradually transmitted through two paths: The narrowing of non-standard financing channels has exacerbated the degree of financing constraints of private enterprises. The intensification of financing constraints has led to an increase in short-term debt pressure. Together, the two compress the cash space that the enterprise can use for shareholder returns. Heterogeneity analysis shows that the above inhibitory effect is more prominent in high-leverage enterprises and high-equity pledge enterprises. Further research found that while the overall shareholder's payment was shrinking. The proportion of share buybacks in the total payment of shareholders has increased, which coincides with the expectations of the alternative hypothesis. The findings of this article provide empirical evidence from emerging markets to understand how regulatory policies affect the return behavior of enterprise shareholders through financing channels.
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