Equity Financing Preference Of Listed Companies In China

The dissertation discusses why China's listed companies prefer to equity financing and how we should regulate the financing of China's listed companies .We discuss these questions on the basis of theories on corporate capital structure and corporate financial decisions. Chapter I shows that why we need to study the equity financing preference, how we do the task, and what the theories basis is where we start the study. Besides it, it will be shown in Chapter I that what conclusion we have drawn and what are the innovations in the paper.Chapter II reviews theories which has existed on corporate capital structure and corporate financial decisions, for example, static tradeoff theory, pecking order theory, and agent-principal theory. These views agree on that corporate financing order should be debt financing first, then equity financing. It describes the common features of corporate financial decisions in Western developed securities markets. However, that of China's listed companies is different. China's listed companies more like equity financing.Chapter III analyzes how the external factors influence the financing preference of China's listed companies. We think that all of trade institution, product market, managers market, and financial market has effect on the financing preference of China's listed companies. Besides it, we describe the features of China's economic environment and analyze that how it influences the financing preference of China's listed companies. Then we draw the conclusion that most of China's listed companies are scale-oriented and they prefer to equity financing.Chapter IV analyzes how the internal factors influence the financing preference of China's listed companies. We discuss the influence of such factors as financing costs, corporate performance, governance structure. The low level of equity financing cost of the large shareholders, bad expectation of corporate performance, and control status of the large shareholders are helpful to equity financing preference of China's listed companies. Chapter V describes the relations between stock price performance and SEO of listed companies. When price comes high, listed companies would choose equityfinancing. In China's securities market, the performance of stock price of ex-SEO and post-SEO is different from that of developed market, which there is significant positive abnormal return (AR) after SEO has done. It encourages the listed companies to choose SEO.Chapter VI analyzes the relations of equity financing and dividends. We do an empirical analysis and draw the conclusion that the large shareholders will take consideration of SEO and dividends in order to gain from SEO and dividends at the same time.Chapter VII give some suggestion on how to regulate equity financing of listed companies on the basis of the above analysis. Our advice is about the principles of regulating listed companies and regulating route.