Analyses Of The Preference For Equity Financing Of Our Listed Companies

Corporate financing is very important to the management decision-making in modern enterprises. The research on corporate financing has been made by the financial academe in western countries since 1950's and has formed a mature system info about capital structure. Myers and Majluf(1984) proposed New Pecking Order Theory ,which states that under asymmetric information conditions firms have no well-defined target debt-to-value ratio, and that firms in general prefer internal financing(first), then external debt financing(second), and external equity financing(third). However, China's listed companies behave in a manner that doesn't follow the pecking order theory. They prefer external equity financing first.The three angles this article chose to analyze and discuss our preference for equity financing are financing costs, the structure of corporate governance, and the system of securities market. The paper firstly points out that the listed companies of our country display a strong preference for equity financing, and gives evaluation on this phenomenon from its influence on the operating effect. Afterwards, there are thoroughgoing analyses on the causes of the above-mentioned phenomenon from financing costs, the structure of corporate governance and the system of securities market. And finally, there follows detailed counter-measures of optimizing the capital structure of our listed companies.