| The refinancing is one of the important functions of the capital market. Listed companies can achieve an optimization of resource allocation by directly raising funds in the capital market which provides an effective financing support for scale expansion and hi-tech projects.With the steady development of the security market and in-depth reform in split share structure in China, listed companies have gradually cast off the main indirect financing mode of getting loans from banks and changed to the approach of refinancing modes of share allocation, additional issues of shares and issue of convertible bonds in the capital market in order to seek funds for the company development Since the start of year 2010, in order to supplement the capital reserve and meet the requirement of capital adequacy rate by China Banking Regulatory Commission, the listed banks headed by Bank of China put forth in succession refinancing schemes for as much as 600billion Yuan by way of share allocation, additional issue of shares and convertible bonds, which generated great pressure to the capital market, therefore, a gust of strong refinancing wind swept China's security market.The Western finance sector has rather matured study of enterprise financing. The classic Pecking Order theory holds that enterprises should follow an order of internal financing-debt financing-equity financing to raise funds. However, China's security market has developed through the transition of from the planned economy to market economy, which is still yet to be improved and get matured. China's security market is quite different from the Western security market in terms of background and development extent and with the unique equity structure of enterprises in China, it is resulted that the manner of the enterprises'financing behavior is totally different from that in the western advanced countries.This paper presents an all-round in-depth study of the refinancing behavior of listed companies on the basis of defining the basic concept and overview of the classic financing theory. First, it is found that the selection of the refinancing pattern of China's listed companies does not follow the classic "Pecking Order" theory in the West, but rather extremely favor equity refinancing manner and have a strong preference of additional issue of shares with a rather low efficiency of raised fund application. Second, when we analyzed the preference of equity financing of China's listed companies from the angles of both listed companies and government, we found that the cost of equity refinancing is lower than debt refinancing as influenced by the critical factors such as high market yield rate and low dividend distribution rate. These many factors in addition to the influences of government policy have caused the phenomenon of listed companies'preference to equity refinancing. Finally, we take the manner of increasing new shares as demonstration object and the period before and after the date of anouncements for increased share issue for three years from 2007 to 2009 as event windows, we verify the extra gain rate of the additionally issued company shares and judge the response of the market to the refinancing manner of additional issue of shares. It is indicated that there is no obvious reaction from the market. The outcome is different from the conclusion by foreign researchers that share price goes down in the market when shares are issued additionally, which explains from the angle of market why the listed companies in China prefer equity refinancing.In combination with analysis of the main body, the end part presents a summary and prospect and in the meantime puts forward suggestions:First, to improve the company management structure through training matured institutional investors and managers; second, to strengthen supervision through raising the qualification threshold and information disclosure extent; third, to perfect the market investment mechanism through improving short mechanism and developing bond market in big scale. |
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