A Study About Equity Financing Preference Of Listed Companies In China

As Chinese capital market development, market position of listed companies in the national economy is increasingly important. In comparison with non-listed companies, asset quality, corporate system, operation and management philosophy of listed companies are better. And many listed companies have become the industry leader. Therefore, to explore Chinese listed companies financing preference formation mechanism and other influencing factors, then to pose targeted improvement ideas will be helpful not only to listed companies but also the Chinese whole capital market and economy development.To find the study entry point, this article reviewed western capital structure theory and domestic existing research of Chinese listed companies financing preference. Before describing the present situation of Chinese listed companies financing preference, the definition of financing preference, financing structure and capital structure was given and relationships of them was presented. Then through statistical method and comparison method we found Chinese listed companies financing preference have such characteristics—exogenous capital is preferred than endogenous capital and equity capital is preferred than long-term capital, which oppose to western countries companies financing preference and corporation financing theory.For the above phenomenon, the article analyzed institutional reasons by historical logic and separately from the point of view of the development of capital markets in China, state-owned enterprise restructuring, corporate governance and the function displaying of financial markets. Then the institutional factors were quantified and added to regression model to verify the correlation between the financing preference of listed companies and institutional factors. Empirical results support the theoretical analysis of the article that the financing preference of listed companies in China is really related to institutional factors. On the basis of theoretical and empirical findings of the study, the paper proposes targeted ideas to improve financing preference of listed companies in China, which include perfecting corporate governance structure, reforming listed companies bonds interest rate formation system and trading system and establishing a sound professional managers market in China.