| The paper begins with the analysis of phenomena that the listed companies altered financing capital's use from 1998 to 2001, summarizes several basic traits, and points out the deep reasons give rise to the phenomena and the adverse result to our country's securities business. Then, based on lemons Model, the paper analyses the market conductibility of the alteration of financing capital's use. We choose the listed companies and investors as participators, analyze the process that alteration of financing capital result in adverse selection. We discuss the companies and investors' utility function model, investors' demand function and listed companies' supply function. We discover that investors are only willing to pay the price of the worst company for the share of listed companies which altered financing capital's use, as a result of adverse selection. So we draw a theoretic conclusion that announcement of alteration of financing capital's use have some valuable information, and share price will fall. And then, on the base of the information content and the CAPM theory, we select "A" shares listed companies which altered financing capital from Shanghai Stock Exchange, from 2000 to 2001, as samples, and empirically analyze the market conductibility of the alteration of financing capital's use. The empirical results show that the fluctuating of samples' average residuals during the window(-30,30)are not distinct as well as that of cumulative average residuals. So the announcement of alteration of financing capital's use cannot transfer any valuable information. Obviously, the empirical results don't support the theoretic conclusion. The reasons are weakness corporate governance of listed companies, speculation mind of investors and improper supervision. The paper finally gives some advice to father it: 1) improving corporate governance of listed companies; 2) strengthening investment mind of investors; 3) intensifying supervision.
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