On Financing Of Enterprise And Optimization Of Capital Structure

Financing from internal reserves and from extemal reserves are twobasic ways for an enterprise to accumulate fonds. Intemal reserves refers toifltemal retained profit, and extemal reserves refers to stock ownershipfinancing and debt financing, Different combination and composition offinancing modes result in different capital structures. Capital structuremeans the ratio between equity capital and debt capital.The aim of capital structure theory in the west to achieve maximizationof market value (or, the maximization of wealth). Capital structure theorystudies the change of ratio between equity capital and debt capital, and its- beinfluence on enterprise value. Capital structure theory is made of early netearnings theory net income flom operation theory, compromise theory, andmodern capital structure theory, of which modern capital structure theory isthe most influential. Modern capital structure theory chiefly refers to MMTheory put fOrward by American scholars Modigliani and Miller, as well ascontingency theory, incentive theory, asymmetrical information theory andcontrol theory.At the time when theoretical studies are going, empirical research oncapital structure is started by scholars. Researches show capital structure isdecided by equity capital and debt capital, that equity capital and debtcapital are connected with enterprise scale, eaming capacity, and operatingrisks. In addition, the ratio of equity capital and debt capital not onlyinvolves the decision by the enterprise itself, it also closely related to thestage of economic development, finance system and enterPrise govemance.At present, the financing structure of listed companies in China is notrational. Issuing new shares and quotas is the chief method of financing,while financing issuing bonds is rare to see. Consequently, the debt ratio ofthe listed companies is low. Such mode of financing cannot keep up withoptimum sequence theory of financing, nor can it meet the requirement ofoptimum capital structure. Therefore, there is realistic importance andtheoretical value is the study of optimization of enterprise financing andcapital structure, which will promote the healthy developmeflt of listedcompanies, and promote the stock system reform of state--ownedentefprlses． The pape乓 bymeans ofqualltatlve and quantitative analysis andemp！ncal research,iscusses the optlmlzatlon of enterprise financing andcapital structure．The paper consists of＊thets following contents． Partone Is aboutEnterPrlse financinganalysls．Itcompares andanalyses tile advantages and dsadvantages of different finallcing methods,stlch as by issuing command and preferential stocks,subscription warrants,transferrable bonds,etc:The paper studies the calculating method ofcomponent capital cost,weighted average cost of capital,and Incrementalcost；deeply analysesthe features ofmarket－oriented financingsystem andgovernment－oriented financing system；probesthe main characteristics offinancing system In China；Illustrates the relationship between enterPrisefinancing structure andenterPrlse governance；lays emphasis ontheanalysis ofdlfferent financing structures andthell·Influence on enterPrisegovernance· Part孙o Is aboutthe theoretical analysis ofcapltal structureoptllnlzatlon．In this part,the paper chiefly analyses early net earningtheor人 compromlsetlleory,and modern capital structurethChCmy．Thepaperof this part chiefly Introduces MM theor人and contlgency theory which Isdeveloped from MM Theory．In paltlcular,the mathematical model analysisofcontlgency theory may provide reference for calculating optlmuln debttllll！ICllg q口OtO． Pal·tThree Is aboutthe Empirical analysis ofcapltal structure andthe reality offinancing．The antllel"gives an overall analysis about capitalstructure of＊theure listed companies In Shanghai Stole Exchange andthelrhnancing reality．After a deep analysis of＊...