The Research On Insufficient Investment And Excessive Investment Of Listed Companies In Our Country Based On The Financing Preference

The study on the enterprise investment and financing behavior has always been one ofthe core issues of modern corporate finance. The MM theory puts forward that corporate’scapital structure has nothing to do with its market value, and varietis of financing ways canbe alternatived each other with no difference, which caused widespread concern intheoretical circles at that time. Then, many scholas have relaxed the assumption of the MM.Trade-off theory and Pecking-order theory are the most representative. Lots of researchabout it appeared after that in domestic theorists. Based on the perspective of financingstructure, they gained the conclusion—enterprise has a preference to equityfinancing—which is different from many foreign empirical results.On the other hand, a company’s financing behavior and the financial constraints areboth the factors impacting its investment decisions. Investment is the purpose of corporatefinancing, and financing decisions interact to investment decision indeed. Therefore, thereis great theoretical significance of the study on the relationship between financing waysand investment decisions to help us understand corporate financial decision-making andthe business development laws. In addition, there has no uniform framework aboutinvestment and financing behavior research, so the study of the interactive relationshipbetween them can be further enriched the theory.First, through the analysis of enterprise financing preference theory, according to thestatus of “equity financing preference”, this paper offers a discrimination betweenfinancing structure and preference in the view of situations in China. Then we use themultivariate ordered Logit model to test each factor of listed companies impactingenterprise financing behavior, re-establishing the internal financing preference in our listedcompanies. On that basis, we provide a empirical analysis on the affects of internal cashflow and debt ratio to the investment spending. The last part gives several suggestionsabout the enterprise investment and financing.