The Influence Analysis Of Corporation's Financing Caused By The Development Of Chinese Finance Structure

It is concluded that a nation's finance condition does great affects and restrictions on corporation' financing of this nation by reviewing several modern theories of corporation financing and comparing different practical corporation' financing moderns in the world. Then it defines what is finance structure used in the paper first. On the basis of this concept it analyzes how does Chinese finance structure develop and what is its characteristics of the development.After the analysis of the development of finance structure ,it analyzes the affects on corporation' financing brought by it and gets the following conclusions : (1) in the past ,Chinese corporations depend on government ,its exclusive holder ,to give money, but now they depend on financing from banks under the supervising of the government. (2) because of the administrative disturbing on bank system, when corporations get money from banks ,the cost of the capital paid by them is under its real cost . As a result, corporations aren't restricted by the cost when financing and they badly depend on financing from banks. Meanwhile it is difficult for corporations to get money from banks. (3) system selection causes the lopsided development of corporations' direct financing channels . Stock market goes farther than bond market. The more important is system selection leads to "market entry cost" when corporations want to finance from direct channels. The total costs include market entry cost and fiscal cost when issuing stocks. Corporations get lower fiscal cost by paying market entry cost. Seemingly it appears that financing by issuing stocks is cheaper ,called "capital hallucination" , but in fact the total cost is higher. The same thing happens if corporations issue bond to get money. The different is the interest of bond must be paid while corporation controls the payment of dividend; so accelerating financing by issuing bond is more restrictive on financing cost. (4) finance structure decidescorporation' financing structure and further affects their capital structure and governing structure. The going finance structure doesn't help Chinese corporations build up effective governing structure.