| Financing is the prerequisite for an enterprise to start, survive and develop. To maximize its market value, an enterprise needs to take the revenue and cost derived from various kinds of financing into consideration and make out the optimum financing structure, furthermore exert a significant impact upon the society's economic life through its financing cost, market value, management structure and capital value. The MM Theory on enterprise financing is based on the incipient financing theory and has testified that the capital structure of an enterprise is irrelevant to its market value through exact analysis, yet in the case of income tax, the idealistic capital structure is absolute obligation; and equilibrium theory is concerning the financial crisis cost and surrogate cost on the basis of MM theory, therefore, an enterprise is trading off between the option of revenue with debts and the bankrupt cost value.With the introduction of unsymmetrical information theory, the financing theory has gained a further development and finally has formulated a modern financing theory which maintains that solutions like motivating the employees and management, cutting down on unsymmetrical cost retaining enterprise's control etc. are not optimum for stock right financing, and to sum it up, when it comes to financing, the "Pecking Theory" should be observed, which is an enterprise should meet the demand of investment by way of sufficient revenue allowance to shun away from stock right financing. If the exterior financing is needed, the ordinary bonds should be issued first hand, second with the mixed bonds, and in the end the common stocks. The practice of the developed nations has proved the theory to be correct.Chinese enterprises have gone through the finance-conducted modeat the planned economy stage, and that of the banking-conducted in the transitional period and have developed versatile financing means during the marketing economy. However, with the low capital debt ratio throughout all the stock issuing corporations in China, the feature is re-financing is presented with the strong preference to stock right and the stock right financing is so popular that it has been carried out by hooks or by crooks. Most of the illegal practices of the corporations are related with the stock issuing financing. But the financing of the enterprises in China is inefficient on a large scale. " First year of excellence, second year of mediocrity and third year of loss" can be the very picture of the stock issuing companies in China. What is more, the statistics indicate that the longer the stock issuing performance lasts, the poorer the economic performance becomes. Despite of the annual stock ration of some stock issuing enterprises, the stock right financing achievements are not as good as expected. These data show that the consequence going quite against our expectations and alone with it is the enormous loss of society welfare, proving the theory that the funds for rights and interests are expensive of all the economic resources according to the Western financing theory.As a rational entity, to maximize its profit, the stock issuing corporation would utilize all the resources and opportunities available. The research purpose of the thesis is to integrate the current policy direction of the government in China's stock market and the weakness of the stock market in China with the revenue cost of the stock issuing enterprises and endeavor to analyze the revenue cost, hence bring about the according proposals for policy making.In the thesis, the government encourages enterprise to carry out stock right financing because of the state owned enterprise reform, the need to increase fund utilization ratio and do away with the potential financial turmoil, the realization of industrial policy and the reduction the impactresulted from the issue of enterprise bunds upon national debts. The government and its administrations at different levels have a gigantic room for rent-searching under the current economic sys... |
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