The Studies On Financing Decision Of Listed Companies Based On Behavioral Finance Theory

As the most important part of microfinancing theory, there exists some drawbacks in the enterprise financing decision theory, such as paying over attention to the question "how we should make decision?" but doing few systematical studty about "how we acturally make decision?", therefore, the problem that financing decision theory is far from the financing decision practice comes out. The basic reason is that classical financing theory is the "perfect theory"which is based on the hypotheses of market efficiency and full rationality, however,as the accumulation of abnormal phenomenon in the economic life and financing market, and the development of psychology and other related subjects, the traditional "full rationality" hypothesis has not been used to explain economic activities in the real life. Therefore, behavioral financing scientists begin to break the hypothesis about full rationality of human behavior in classical financing theory, and then bring psychology and epistemology into the microprocess of evolvement in financing market, so as to reveal the feature and reasons in all kinds of economic activities more accurately.This paper is based on the results of behavioral financing theory, using the method that combine the normative research with the positive research to discuss the issue of financing decision in public company under the framework of market irrationality and management irrationality respectively, and then try to make some study and development in classical financing decision theory. Under the framework of market irrationality, this paper take IPO (1994-2007)in the two markets as the subject, and "hot market" and "cold market "as the measurement of market timing, examining wether there exists market timing activities in china's public firms, and its short-term effect on financing decision in public firms and its long-term influence upon financing strcture. Under the framework of management irrationality, we design the financing decision model of controlling shareholders on the bases of prospect theory, and then analyse the impact of the irrational behavior of controlling shareholders on financing decision. Furthermore, we examine the herd behavior of management and the formulating mechanism of financing decision, revealing the procedure of financing decision in public firms.The organization of this paper is as follows:part 1 is introduction which lays out the background and significancy of this article, the theory framework of the research, the organization and conent of the article, and the innovative point of this paper; Part 2,firstly, according to the envolving process of financing decision theory, this article systematically review financing decision theory in the condition of equal information, then review and evaluate the viewpoints in china's public firms'financing decision research; part 3 from the three layers of market environment, corporate characteristics and individual psychology, we systemaically analyse the factors that will influence the firm's financing dicisions; part 4 under the framework of market irrationality, examining the market timing behaviors in public firms, in the process of positive research,we bring the political factors into the model and testify that market timing in public firms include market price timing and policy timing; part 5 from the two points of controlling shareholders and management,discussing the impact of management irrationality on financing decision in public firms; part 6 make a conclusion of this article, and put forward some instructive idea in the future research in the light the weakness of this article.