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A Study On The Relevance Of Corporates' Financing Ways To Their Investment Efficiency

Posted on:2006-06-09Degree:DoctorType:Dissertation
Country:ChinaCandidate:B TanFull Text:PDF
GTID:1116360152471864Subject:Business management
Abstract/Summary:PDF Full Text Request
The author in this dissertation manages to construct a theoretical frame to illustrate and to offer an empirical approach to measure the impact of ways from which a corporate chooses to raise capital on the corporate's investment efficiency. To reach the aim, he surveys the reasons why debt financing, equity financing and internal funding ways respectively gives rise to inefficient investment and each expressions, but he also interprets the governance functions of the three financing types. Furthermore the author continues to explore the characteristics that China listed firms have in their financing ways. In the following chapters, the author exams the relevance of dividend payment, cash holding, equity financing and debt financing to efficient investment and considers the relevance to challenge the traditional capital budgeting decisions and feasible evaluating criteria.In the analytical process,the paper's emphasis and innovations are as follows:one is to make clear the importance of corporate governance in the correlation between financing ways and investment efficiency. The second is to offer an approach to test whether a financing policy is appropriate in the dimension of investment. The third is to probe into the questions of capital budgeting decisions in the incomplete capital market. The fourth is to strike the ownership structure into the relevant theory. The fifth is to explain the financing and investment's relevance from two sides i. e debtors and creditors. And the last is to inquire into the problem of optimal cash holding in the conditions of asymmetric information and managerial discretion. In addition to the theoretical exposition, the author also empirically analyze the specific ways of raising capital among China listed firms such as paying few cash dividends, choosing low debt level, and being inclined to issue stocks, which have in the end contributed to over—investment. The reasonable way to improve the inefficient investment turns out to set up modern corporate institutions, especially those of legal person ownership among the state—controlled companies. Moreover, the governance structure should be rebuilt and appropriate financing ways should also be selected.
Keywords/Search Tags:investment efficiency, dividend payment, cash holding, equity financing, debt financing, governance functions
PDF Full Text Request
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