Research On Financing Preference Based On Behavioral Corporate Financing

This paper attempts to analyse the financing behavior of the listed company with the behavioral financing theory, and make research on the behavioral factors which result in the preference for stock financing in conjuction with the financing practices of Chinese listed companies. This paper puts forward the concept of " behavioral financing preference" in order to distinguish such other types of financing preference as cost-based financing preference, governance-based financing preference and institution-based financing preference.Major difference between the financing theory of the behavior and traditional financing theory is the introduction of " irrational factors " whose research follows two basically theoretical frameworks. Firstly, the irrational framework of the market; Secondly, manager's irrrational framework. This paper makes some researches from theoretical and empirical pionts of view.Under the frame of the irrational market, the major researches focus on :1. Empirically study whether there exist market timing for the listed companies to finance in Chinese security market. There have been documents that proves that such timeing behavior exists in U.S security market, but no relevant research has been carried out at home. Our empirical work indicates that the listed companies of Chinese security market behave in the same way. And higher M/R ratio for a long time in Chinese securities market proves the preference of listed companies for stock financing to some extent.2. Extend the capital structure model based on decision-making flexibility to the framework of irrrational market. Investors's irrational behaviors are certain to produce heterogeneous believes , the introduction of which has changed the basic hypothesis of the flexibility of decision-making model. On this basis, the conclusion can be reached: With the increase of the irrational degree of market, the manager put more and more attention on value of flexibility in decision-making. Therefore, these companies are inclined to issue the security with more flexiblity.Under the framework of irrational managers, the major researches center around:1. Empirically study whether there exist herding behaviors in the course of financing. This paper has put forward a kind of index of measuring the effect degree of herding behavior in IPO, and empirically make comparision between security markets of China and the United States. The result indicates that IPO behavior on both Chinese and America security markets have the effect of herding behavior to a certain extent. Comparatively speaking, the effect of herding behavior of China's securities market is more obvious. This prove that excessive preference for stock financing might be related to herding behavior in the course fiancing.2. The irrational market factors are introduced under manager's irrational frame. Foreign relevant documents often suppose that the market is rational while investigating the financing behavior of the irrational managers, so its conclusion is very much difficult to interpret the China security market. Because of introduction of the irrational market factors, financing choices not only depend on the degree of manager's own irrationality but also depend on the degree of market's irrationalitythat the managers perceive. The degree of market irrationality being perceived by the overoptimistic and overconfident manager increases as the degree of manager's irrationality increase, so they will deem that the stock price is over-evaluated rather than underestimated,then.would like to issue equity.