Irrational Equity Financing For Listed Companies In China Prefer To Study

Corporate financing is very important to the management decision-making in modern enterprises. The research on corporate financing has been made by the financial academe in western countries since 1950's and has formed mature system info about capital structure. Myers and Majluf (1984) proposed New Pecking Order Theory , which states that under asymmetric information conditions firms have no well-defined target debt-to-value ratio, and that firms in general prefer internal financing, then external debt financing, and external equity financing. However, China' s listed companies behave in a manner that doesn' t follow the pecking order theory. They prefer external equity financing, then external debt financing, and internal financing.This paper has analyzed the reason why the listed companies have equity financing preference. At first we analyze recent data of Chinese listed companies. The second and third chapter introduce the basic theory of behavior finance and give some conclusions in behavioral corporate finance.Financing has important influence for the development of corporation. Especially with the fast development of the capital market of our country, the listed company increases year by year, and is occupying more and more important position in national economy. Their financing way or financing behavior not merely influences the long-term development of corporation, but also influence the sound development of the capital market. According to our country's actual conditions, the capital market of our country is a new developing market and the modern corporation system has not been really set up yet, etc. This must make financing behavior and way of the listed corporation of our country have its own characteristics. Chinese listed companies demonstrate the strong preference to equity financing obviously. But the consequence brought by the equity preference is that the achievement drops continuously and the efficiency of capital use is low. At last we make some suggestions to the market policy at present.