A Study On The Influence Factors Of Chinese Listed Companies’ Refinancing Preference

Compared with securities market of developed countries, China’s securities marketis still immature. In developed countries, the listed companies always tend to choose therefinancing tools of the lowest risk, and their financing preference always follow thePecking Order Theory. In China, the listed companies have different financing structureand refinancing preferences. They have few financing channels and they show evidentequity refinancing preference. The refinancing behavior of listed companies not onlyaffect the company’s financial structure, return on investment and cash flowarrangements, but also affect the efficiency of allocation of capital for the securitiesmarket macroscopically. Therefore, conducting research on the financing preference oflisted companies would help to identify the problems which exist, and is of greatsignificance for listed companies to correct their financing behavior and gain healthydevelopment and for improving the capital market environment.Applying theoretical and empirical method, this paper focus on studying therefinancing preference of Chinese listed companies. Firstly, literature review is shown,including empirical study results of domestic and foreign scholars. Then this papershows the general refinancing behavior of Chinese listed companies, an overalldescription of the characteristics of the financing preference is included. Depthinterpretation of the influencing factors of China’s listed companies’ financingpreference is listed. This paper explores the reason that listed companies keen on equityrefinancing through studying the development status of the stock market and the bondmarket from a macro point of view, establishing equity and bond cost measurementmodel to estimate financing costs of listed companies, and Applying logistic model onthe data of535Shanghai and Shenzhen listed companies from2007-2012to analyze thefactors that affect the refinancing preference. The empirical results show that the unevendevelopment of the bond market and the equity market will affect the financingstructure of listed companies in China. Company characteristics, as well as insidermotivations will affect the listed companies’financing decisions. The corporategovernance helps to reduce internal motivation and the high equity refinancingpreference of the listed companies. At last, this paper put some forward suggestions onhow to reverse the equity refinancing preference of listed companies.