Chinese Listed Companies' Capital Structure And Financing Research

There are many researches about capital structure and financing way that were studied on basis of MM Theorem since its establishment in 1958. It makes plenty of theoretical and directorial implication to analyze capital structure and financing way of listed companies, for these have no long been simple questions and even beyond the scope of corporate finance.In this paper, through analyzing corporate capital structure and financing way of listed companies in China from 1991 to 2002, I find that the listed companies in China have their unique characteristics: higher debt-asset ratio, relatively high level of current liability and to have obvious preference of equity financing. These characteristics are different from that of the listed companies in Western. Especially equity financing preference is different from optimal financing order. Furthermore, I prove relative reasonableness of this financing preference in an emerging market such as China, and also prove low-efficiency of equity financing with practical research of a sample of 100 listed companies from Shanghai and Shenzhen exchanges in 2002. Then, I summarize some variant factors that influences corporate capital structure and financing way of the listed companies in China. According to these factors, I put some suggestions for achieving relatively optimal capital structure, enhancing corporate governance and finally improving Chinese capital market.