Corporate Bond Financing Study

To raise the capital with domestic corporate bonds can improve the capital structure and the corporate governance, and help corporations to reduce their financing costs. Under the guidance of the firm's financing theories, the research of the size of corporate bonds financing and firm's financing behavior have been done through the application of qualitative analysis combined with quantitative analysis of multivariate statistical, taking into account the financing behavior of listed companies. This thesis consists of three parts and six chapters. In the first place, focused on the financing environment of corporate bonds in China, this thesis analyzes external environment of corporate bonds financing, including the status, legal and regulatory framework of Chinese corporate bonds market, and compares domestic corporate bonds market with international corporate bonds market, demonstrating the macro-economic factors to influence domestic corporate bonds market, and a large room for China to promote corporate bonds market. Then, having reviewed the academic papers and research in this field, a conclusion has been reached that, to influence the development of corporate bond in China, reforms of the systems of corporate bond should be carried out, including: 1) the system of initial issuance of corporate bonds and rate in marketlization; 2) credit ratings; 3) secondary market; 4) introduction of the market-makers; 5) financial system and optimization of the allocation of financial resources. Chinese corporate bonds market will be developed rapidly, thus providing a variety for firms to diversify financing structure and creating a good environment for corporate bonds market through the reform of the systems. Secondly, based on the firm's financing theories and literatures reviewed, the thesis deals with the analysis of the behavior of the corporations' financing. Owing to the unreasonable ownership structure and highly non-tradable shares, Chinese listed companies have the preference of equity financing to debts. If company took the debt refinancing, they would have the preference of bank loan to bonds. On the other hand, the characteristics of the top managers' refinancing behavior are similar to those of the companies. By collecting data from the top managers' holding shares of listed companies, the empirical analysis shows that the more shares top managers hold, the more conservative financing policies the firms would carry out, trying to raise capital via right issues other than debt refinancing. However, it is shown that top managers with few shares will finance at discretion. Last but not the least, the prospects for the development of Chinese corporate bonds financing have been seen. They are as follows: 1) the non-tradable shares are traded freely on the market; 2) the futures market of government bonds should be resumed; 3) derivative instruments of the interest rates are provided progressively, such as forward rate agreement, interest rate swap, and so on.