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Cost Of Funding Research

Posted on:2002-12-27Degree:MasterType:Thesis
Country:ChinaCandidate:Y N GaoFull Text:PDF
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With the deep-going of economic system reform and gradual effecting of the rights delegation to the enterprises, The significance of financing problem in firms? establishment & expansion has been reflected early. The financing decision refers to enterprise seek for the financial stmcture or finance contracting during the financing process to minimize financing cost. To theorists and entrepreneurs, Exploring for the efficient financing methods, courses and combinations is the focus and how to lower financing cost is one of the main research centers. But at present, The research related to capital cost is limited in unilateral and separately analyzing and rough calculating, which is in a narrow sense. There is also a deviation in the understanding of financing cost. At the same time, In china's practice, Listed companies regard equity financing as means to seek money at low cost or zero cost. These conditions run counter to modem financing theory. Understanding financing relationship clearly and regarding financing cost correctly are the keys to improve the responsibility of firms and risk sense of investors. They are also beneficial to perfect market economy and to optimize resource allocation. My thesis mainly answers the following questions: What is the nature of financing relationship? What are the reasons why firm spend financing cost? Among these components of financing cost, which one is necessary? How can firms lower financing cost? The thesis is divided in three parts: Part one, Theory review and problem raising. I discuss the present situation of studies concerning capital cost and point out the shortages of current theory. Part two, Financing relationship and financing cost. First, I adopt the theory of the firm to analyze financing relationship, I consider that different financing means and courses determine different financing relationship, different financing relationship can be standardized by financing contract, and financing contract decides the contents and amount of financing cost. Then, I define the concept and composition of financing cost and capital cost, 1 suggest that financing cost is the contract cost of financing, which consists of capital cost and financing fees. Capital cost equals required returns of investors. Different investors?required returns are composed of return without risk and relevant risk compensation. Part three, The way to cut down financing cost. I discuss the way to lower the risk of firm and the method to decrease agent cost. I argue that this target can be realized via the improvements in micro and macro aspects.
Keywords/Search Tags:financing cost, capital cost, contract risk, corporate governance financial structure, required return of investor
PDF Full Text Request
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