Study Of Corporate Financing

With the deepening of the reform of economic system, enterprises, the main players in a dynamic market environment, must operate all their production activities in compliance with market rules. Since the development of enterprises is basically determined by whether they have stable sources of financing, fund-raising has become a matter of primary importance. The transformation of fund supply system, the maturing of capital market and the diversification of raising-und channels, all have created conditions for autonomous corporate financing and therefore has made the study of corporate financing sensible and meaningful.In view of the current situation in China, it is stated in this thesis that the most urgent research task is to study the contradictions and problems of corporate financing in the process of economic transition, and to find out origins of these problems as well as solutions to them. The thesis tries to provide theoretical basis for the reform of corporate system by analyzing corporate financing behaviors of State-owned Enterprises, and revealing reasons behind their rational and irrational behaviors. Corporate financing behaviors can only become standardized when the reform of corporate and financial systems is deepened, the channels of fund-raising widened, the financing environment improved, and effective incentive and restraint mechanisms set up through hardening external restraint and innovating corporate ownership system.Apart from the introduction, the thesis comprises four chapters.The introduction primarily presents the theme and background of the research, defines and clarifies the concepts used in the thesis, and briefs the approaches and structure of the study.In Chapter Two, new classification of financial methods is discussed from the viewpoints of development economics. Traditionally, enterprises are thought to have two main methods of financing accordingly: direct financing and indirect financing. However, such classification cannot meet the need of the multi-financing system under the market economy. Using the analytical method of capital flow, the thesis puts forward the new classification of financial methods, i.e. fiscal financing, banking financing, commercial financing, security financing, and international financing. Compared with the traditional one, the new classification is multi-level as well as all-round. Therefore, it is more realistic and with great policy value.Chapter Three deals with foreign financing theories, which give theoretical support for the empirical study. Any action taken pursues a given goal. Corporate financing is a choice of corporate capital structure in the pursuit of a given goal. Thus, the rationality of corporate financing can be assessed by how capital is structured. In this chapter, theories (including traditional ones and MM Theory) are reviewed, factors affecting the result of MM theory are analyzed, and the implications of MM theory to China's current capital market are described. Under the market economy, enterprises are advised to raise money according to the following order: internal financing à bond issuing à stock listing.Chapter Four is about international comparison, which discussed the characteristics of corporate financing models in different countries in the perspective of international comparison and their significations for China. In the U.S., the relations between banks and enterprises are loose and the major restraint on the management is stock market. High liquidity of stock market and shareholders' interest in short-term lead to the short-term behaviors of enterprises. In the Japanese model, corporate funds are supplied by banks so that banks andenterprises become interdependent. Corporate holding stabilizes the structure of shareholding and enables Japanese enterprises to focus more on their long-term development. Germany has a universal banking system, by which banks are not only the biggest shareholders of enterprises, but also the biggest creditors.The last Chapter is empirical analysis of China and p...