Research On The Problems Of China's Military Enterprises Issuing Preferred Stocks For Financing

Preferred stock is a kind of stocks which has the priority of dividend and claim rights over other common stocks. The preferred shareholders do not have the voting rights and they cannot participant in the management of the company. So the issue of preferred stock for financing will not decentralize the original stockholder's control rights. The preferred stock is a kind of internationally accepted stock, which has the same importance in company's financial structure as the general stocks do. Western developed countries, such as countries in Europe and America, all adopt the preferred stock. It is not so popular in Asian countries as western countries, but in some countries and areas, there is a large number of companies who issue the preferred stock for the purpose of financing, such as Stock exchange in Korea, Japan and Taiwan. The application of preferred stock financing could raise funds for the enterprise; meanwhile it also protects the original stockholders' control rights.Military enterprise is an important component of national economic development. In the course of military enterprise reform, our government reduces the direct investment to the military enterprises step by step. On the other hand, the development of military enterprises needs funds urgently. The nation's biggest worry is that who will take control of military enterprises because military enterprises are connected with national security and military secrets. For the constraints of military enterprise's financing and restrictions on investments of social capital into military enterprises, its financing channels have been narrowed. In such a dilemma of widening its financing channels and keeping the control power, to issue preferred stock for financing is a much better choice.This article, by using normative research method and basic theories of economics and management, discusses the issue of preferred stock in China's military enterprises for financing on the basic of combined China's military enterprise characteristics and foreign experience.By analyzing the specific situation of China's military enterprises and learning advanced international experience, this article discusses the necessity and feasibility of China's military enterprises issuing preferred stock for financing and provides specific suggestions. This article includes six main parts. The first part is an introduction. It covers the background and significance of study on this topic. The second part elaborates definitions and characteristics of preferred stock and military enterprise, preferred stock tapes and functions, etc. The third part analyzes the problems of issuing preferred stock for financing of China's military enterprises and the reasons. The fourth part is foreign experience, analyzing the specific situation of preferred stock issuing among military enterprises in the United States, Britain and Japan. Part five is about countermeasures and suggestions. In this part, the author analyzes the necessity and feasibility of China's military enterprises issuing preferred stock for financing and makes internal and external proposals for preferred stock financing in military enterprises. Proposals and suggestions include:Military enterprise should fully understand and renew financing perception, seizing the best opportunities to issue preferred stock; introducing preferred stock when it is going to establish new stock corporation, determining reasonable stock dividend and stock prices. The management of capital market should increase the intensity of concern for preferred stock financing in military enterprises, establish and improve related policies and laws for military enterprises to issue preferred stock for financing. The government should strengthen policy-based guidance and could relax appropriately the regulation on the issue of preferred stock in military enterprises. The last part is conclusion. The author hopes that this article will provide theoretical foundation and suggestions for China's military enterprises to issue preferred stock for financing in the future.