An Empirical Study On Financing Preference Of Small And Medium - Sized Listed Companies Based On Optimal Order Financing Theory

Financing preference is the dynamic choice to pecking order of financing method from the company’s subjective wishes, which means the company have to meet its’ financing needs under restrictions of financing circumstances. The study of financing preference could bring out the actual process of financing decision, improve the resource allocation efficiency of capital market, and assist the decision making of the company.Based on the financing panel data of listed companies on SMEs (small and middle-sized enterprises) Board from 2010 to 2014, the paper analyzed the characteristic of SMEs Board, and corrected the Myers pecking order empirical models according to the capital market of China. First, the study tested the pecking order of inter-external financing method based on the empirical model 1 to the companies of SMEs board. Second, the study tested the pecking order of debt-equity financing method based on the empirical model 2. Third, the study tested the pecking order of long-term debt and short-term debt based on the model 3. The result shows that, sample companies prefer external financing to internal financing, prefer equity financing to debt financing and prefer short-term debt to long-term debt financing. This paper further analyzed the key factors which result in those preference choices from the enterprise scale, liability level, growth ability and industry sector, analyzing the direction and level of the four key factors to the choice preference.This study analyzes the applicability of the pecking order theory, which comes from the western countries to SMEs Board in China, provides the evidence of financing preference in view of the new space-time and new samples, and suggests an assistance to study the practical decision-making of the company manager.