Private Corporate Finance, Strategic Management And Institutional Change

Chinese private economies flourished in the economic reform between 1970's and 1980's. The private enterprises have become the main driver of Chinese economy, which also means once the private economy encounters a hindrance, the potential of development in Chinese economy will decrease. Investigations show a widely existed problem private enterprises (the following will call PE) have is the difficulties in accessing to finance. Although most of the PE have the incentive to expand their capital, they have to rely on the accumulation of internal capital fund. The lack of external finance has greatly confined the growth of PE. If this problem can't be solved, it will ultimately affect Chinese macro economy. Therefore the study on the financial difficulties of PE attracted much academic interests in recent years, while the survey on these studies show that the most of the current researches focus on the hypothesis of definite financial capacity and financial requirement in PE, they speculated on the lacking of financial channel, and suggested several methods of increasing the effectual supply of finance. According toRajan and Zingales (2001), an alternative explanation for the difference of financial system in the world is that there are structural impediments to supply rising to meet demand. Perhaps a country does not have the necessary levels of social capital or "savoir faire" to create a viable financial sector. Such kind of demand should be effectual demand, which means the demander should meet the requirement of the supplier. The current research can not explain the financing practice of PE, different firms have totally different effectual demand according to the level of management Therefore the current studies have not told the whole story. Taking this as the breaking point, the thesis explore the effectual financial demand and effective supply, following the logical of "what is the current financial state of financing problem in Chinese private firms why is that how to resolve it", combined theoreticalanalysis with positive study and case study, providing a general survey on the solutions of PE financial difficultiesThere are nine chapters in this thesis, except for the introduction and conclusion, the left can be grouped as three parts. The first part includes chapter two and three, which describe the status quo of PE financing, meanwhile anaysis the mechanism. I drew the conclusion that the financial constrains of PE due to three constrains: industry constrain, size constrain and stystem constrain. Although the PE have strong incentive in financing, the financial ability constrains its effectual financial demand, which lead to the difficulties of bridging the financial gap even if the financial channels are unblocked; at the same time the command economy restrained the supply of finance to PE, which results in a shortage of supply. Therefore I suggested two ways of releasing the constrains: the private enterprises have to make strategic management on financing, to enhance their financial ability, at the same time, the reform of the institutional invironment is necessary, which means to decrease the ownership bias in the economy stystem, and supply enough financing channel to increase the effective supply.The second part include chapter 4 to chapter 8.This part focus on the effectural demand of finance by the PE, maily discussed the financial strategic management, which is the core of the dissertation. The meaning of financial stragtegjc management is to enhance the financial ability and get the necessary fund, to realize the stratey goal of the enterprise by analyzing and improving the financing environment The anaysis based on the strategic management theory and finance theory, and have the definite financial environment as hypothesis. Although the capital structure theory has been developed for so many years, it has a very important hypothesis as the company can always get fund in order to change its capital structure, it will be meaningless to discuss whether the capital structure matters or what factors de...