Study On Financing Preference Of Listed Corporations In China

Economists Myers and Majluf (1984) presented the famous hypothesis on financing preference sequence. This theory holds that the financing preference of enterprises should be internal financing first, followed by bond financing, and finally equity financing. The practice of the financing in companies of the developed countries also empirically supports this conclusion.However, after we conducted surveys on the financing practice of the listed companies in China, they were found to have equity financing preference, which is contrary to the financing theory and practice in western countries. Moreover, this preference affects the listed companies in a negative way for their healthy growth as well as the development of securities market. Therefore, the financing preference problem becomes a pressing problem in both theory and practice.What is the reason that causes the financing options of the listed companies in China to be different from the practice of the developed countries? After statistical and positive study on a large number of material of the listed companies, this thesis draws that the listed companies in China have a obvious equity financing preference.. With a profound analysis of the internal and external causes for this preference, it alsopresents the corresponding measures for improvement according to the analysis result. This can make a positive contribution to optimize the financing structure of listed companies, improve their governance structure, promote their healthy development, achieve the optimal allocation of the social capital resources and ultimately maximize social benefits.