The Study On The Stock Financing Behavior Of Chinese Listed Companies

This paper aims at one of the hot spots of academic and business circlescurrently—the financing order of listed companies in China. It does a thoroughresearch on the choice of financing methods, the reason of the companies' preference and the performance of investment and operation after financing by theoretical and empirical methods.According to the traditional financing theory, the financing order of an enterprise is internal financing, debt financing and stock financing. According to Pecking Order Theory, the financing order is the best choice of maximizing the value of the company and shareholders. But we find that the financing order of Chinese listed companies is stock financing, debt financing and internal financing and the distinguishing characteristic of Chinese listed compames' financing structure is stock financing preference. Therefore, the financing behavior of Chinese listed companies is inconsistent with foreign financing theories. Therefore, on the base of studying domestic and foreign related literatures, this paper takes Chinese listed companies as investigated subject, uses western financing theories and corporate government theories to analyze the characteristic, the reason and the influence of Chinese listed companies' financing behavior. It also discusses whether their financing preference is the best choice of maximizing the value of listed companies under the situation of our country nation. This paper tries to answer the following four questions: (1) What is the characteristic of Chinese listed companies' financing behavior currently? (2) What are the reasons for the characteristic of Chinese listed companies' financing behavior? (3) What is the influence of the behavior characteristic to the performance of companies' investment and operation? (4) How to regularize the financing behavior of Chinese listed companies.This paper has 5 chapters.Chapter 1 elaborates research background and the meaning of choosing this topic. It reviews domestic and foreign related literatures and put forward the idea, the frame and the research method of the paper.Chapter 2 analyzes the financing structure of Chinese listed companies by contrast and data analysis. The financing structure of Chinese listed companies has following characteristics: (1) preferring external financing to internal financing; (2) preferring stock financing to debt financing; (3) preferring stock financing when refinancing. So we got conclusions from here: the financing order of Chinese listed companies is stock financing, short-term debt financing, long-term debt financing and internal financing and the distinguishing characteristic of Chinese listed companies' financing structure is stock financing preference.Chapter 3 analyzes the reasons for the stock financing preference of Chinese listed companies by qualitative analysis. It analyzes the financing cost, the market binding force, the special ownership structure and the maximum value of managers. It got conclusions as follows: (1) the direct motivation of stock financing preference is that the cost of stock financing is lower than that of debt financing; (2) the exterior inducement of stock financing preference is that the binding force of stock financing is weaker than that of debt financing; (3) The root cause of stock financing preference is the special ownership structure of Chinese listed companies and the pursuit of maximum value of managers. With the tendency, stock financing becomes the best choice for managers when financing. Stock financing becomes the tool of managers of listed companies to seek private interest and maximize their own value, not the best choice of maximizing company value.Chapter 4 further discussed the influence of stock financing preference to the performance of companies' investment and operation by quantitative analysis and case study. It researched companies' performance and investment return after additional issues and allotment of shares and got conclusions as follows: Stock financing preference has never improved the investment return and performance of listed companies. The efficiency of fund is low and shareholders' value is damaged. On the one hand, various advantages of stock financing make listed companies have strong preference. They are "over financing" even without good investment project. On the other hand, the weak binding force of the raised fund also makes listed companies prefer stock financing. Listed companies incline to "over investing" in making investment decision. It results in the low efficiency of raised fund and the damage of shareholders' value. It proves that stock financing isn't the best choice of maximizing the value of the company and shareholders.Chapter 5 concludes and provides policy suggestion. The stock financing preference of Chinese listed companies is bad for allocation of resources, so it needs to be regulated. We need to improve not only the exterior market environment, but also the government structure of listed companies: to improve the efficiency of Chinese stock market and perfect market system; to optimize ownership structure and government structure of Chinese listed companies and perfect agent incentive system.