Research On The Listed Companies' Excessive Equity Financing Based On Pyramid Structure

With the development of the capital market and the growth of the equity financing scale in China, the phenomenon of excessive equity financing by Chinese listed companies has been attracted more and more public attention. Due to there is no clear measurement of the excessive degree of equity financing, the relevant empirical research is still scare.Using a firm-level dataset of listed companies which were equity refinanced during the period of 2002-2005, the study takes the ultimate controllers' invasion to listed companies and small shareholders as the perspective, to explore the relationship between the pyramid structure and excessive equity financing behaviors. The results are as follows. Firstly, the phenomenon of excessive equity financing of listed companies in China is common. Secondly, the deviation of ultimate control and cash flow based on pyramid structure is the root cause of invasion, the greater of the deviation degree, the greater of the excessive equity financing degree. Thirdly, the complexity of pyramid structure will affect the degree of excessive equity financing, which is mainly reflected in the positive effects caused by hierarchy. Finally, the styles of property rights will have a significant impact on the degree of excessive equity financing, and non-state property rights correspond greater degree of excessive equity financing.As the first empirical research about excessive equity financing behavior based on the respective of ultimate controllers' invasion motivation, this study may provide some referential significance to the development of the corporate finance theory and the regulation of equity financing behavior.