Financial Governance Constraints Irrational Financing Behavior Of Listed Companies In China

Corporate financing is located at the micro level of enterprises and will influence the value of an enterprise. However, as corporate financing of many companies are considered together, it will influence the development of capital market and even the whole economy. Therefore, corporate financing has become an important issue of corporate governance, capital structure, and corporate finance.In our country, companies of security market have a serious problem in financing: irrational financing. One side of this problem is preference of stock financing; the other side is over financing. With the irrational financing, in our security market there are many cases that big shareholders misuse the fund of their company, big shareholders cheat middle and small investors, false statement of company performance, and problematic cycle of sponsoring. These problems block the development of capital market and damage the benefits of investors. The final reason to cause these problems is that corporate finance governance is out of control.The major purpose of this thesis is to investigate the reasons of irrational financing of companies in our security market and try to resolve this kind of irrational financing. Therefore, this thesis utilizes the theories and methods of modern economics, takes the conflicts among relevant benefit receivers of companies as clue, discusses the corporate financial governance model, builds an institutional model of corporate financing behavior, and analyzes the irrational financing of companies in our security market according to this model. During the analysis, we think: The companies in security market have not only preference of stock financing, but also over financing, and preference of stock financing is a performance of over financing under some special institutional background.On the basis of analysis above, this thesis thinks that: (1) Because of the current characteristics of companies in our security market and the current finance governance environment, both outside and inside control are not comprehensive for the changing corporate finance governance. In order to solve this problem, we need to build up a comprehensive finance governance model from three financial relations. (2) The irrational financing of companies in our security market is related to incomplete corporate finance. The incoordination among shareholders, bond holders, and managers and incoordination between outside shareholders and inside shareholders is the institutional reason for over financing in companies of security market of China. The incomplete finance governance has made over financing common in the companies of security market. On the basis of this, the system of exchangeable and unexchangeable stock and other environmental issues of finance governance are the comprehensive reason of preference of stock financing of companies in our security market. (3) In order to solve the irrational financing of companies in security market, we must carry out comprehensive finance governance from three financial relations.On the basis of analysis above, this thesis concluded: build up a comprehensive finance governance on the basis of big shareholder governance; strengthen supervising internal shareholders by outside shareholders; build up motivation mechanism by making managers hold shares; strengthen the outside restricting mechanism for managers; strengthen controlling enterprises by banks; build up effective mechanism of debt sponsor; develop bond market of enterprises; foster institutional investors and build up necessary conditions to make them work effectively; strengthen legal protection of middle and small investors.