Research On Financing Preference Of Listed Companies In China

As to listed companies, the financing way is varied, such as keeping surplus, bank borrowed money, depreciation, issuing stock, company's bond, etc.. The financing account for the ratio between the total financing, would constitute the financing structure of enterprises, which demonstrate the financing preference of enterprises, this partiality represents the choice to the financing way of listed company of China. Listed companies in China are more dependent on external equity financing, which is different of the Pecking Order Theory. And it is proven that over equity financing will lead to inefficient allocation of resources. This years more and more people pay attention to the phenomena. A majority of scholars pay close attention on the research of financing preference as hot issues.This paper focus on the financing preference of listed companies in China based on normative analysis and empirical research method. Firstly, literature review is listed in chapter 2, which includes MM Theory, Balance theory, Agency cost theory, Signaling Theory, Pecking Order Theory and Control theory. Valuation of researches on this topic is also included. In order to explore the performance of financing preference, chapter 3 analyzes the evolution of financing in China from the planned economy to transition period until the market economy. And this chapter analyzes the financing mode of listed companies in China, including holistic and trades approach. The paper selects the companies of Shanghai and Shenzhen markets which chose the equity financing and selects some available variables to examine the impact of equity financing preference of listed companies in China, such as enterprise scale, income tax, capital structure, profit ability, bankruptcy risk, non-debt tax shields, agency costs, growth, collateral value of assets, shares arid state-owned shares in chapter 4. Chapter 5 is to further explore why our listed companies have a clear preference for equity financing, but this trend has a certain negative impact on the development of listed companies and capital market. At last, this paper put some forward suggestions on the issue of how to control financing preference of listed companies in China to better improve the Securities Market.