Listed Companies Of The It Industry Investment And Financing Empirical Test Of The Interactive Relationship

The modern corporate finance theory has been developed for more than fifty years and the study on investment and financing decision now is in-depth; at the same time, there are some theoretical achievements on the endogenous interaction between investment and financing. The studies in western countries are based on clear property rights, strong economic freedom, abundant information flow and reliable contract & law system. On the contrary, due to lack of the characteristics which western countries have, the investment and financing system which our enterprises face now is unsophisticated and faultiness. The study on interactions of investment and financing decisions also lagged. This paper targeted on listed IT corporations in our country to analysis their investment and financing decisions, and empirically tested the interactions of investment and financing decisions from the perspective of funds flow approach and principal-agent capital structure theory, to dig out the key influencing factors to corporate investment and financing decisions.Firstly, this paper reviews the corporate finance theories on the interactions of investment and financing, including M & M theorem, trade-off theory, principal-agency theory,informational asymmetry theory,financing constraint model and the fund flow theory. Meanwhile, the paper introduces the principal of the simultaneous-equation models used to test the interactions of investment and financing by 2SLS, 3SLS & SUR, respectively.Secondly, based on the fund flow theory, the paper conducts empirical test of interactions of investment and financing decisions of IT listed firms by a simultaneous-equation model. The results show that issuing new debt will accelerate investment, and investment can improve firms'capability of debt financing, and sources of funds (debt and equity) would compete with each others. Further, the paper extend the simultaneous-equation model, empirical test the existing theory of the different proportion of the debt and the old debt can be as a term to examine the underinvestment and the overinvestment.Finally, based on the empirical test results and the history & status questions, the paper proposes some suggestions for both executants-companies and supervisors governors on companies'investment and financing.