The Study On Equity Refinancing Preference Of Chinese Listed Companies

Listed companies’ financing decision is important to the companies’ development and macro funds allocation. Studies have shown that listed companies prefer equity financing; this is different to traditional financial theory. Behavioral finance propose new hypothesis which is conform to the financial market, no more stringent require fully rational and efficient market; And provide new method to financial research. This paper will research whether psychological deviation of companies’ internal policymakers and external investor can influence the equity refinancing, especially overconfidence of internal policymakers and market timing. This paper will introduce the basic concepts of finance and behavioral finance, and the literature review, the third part is the current situation of China’s financing decisions. Then we will take empirical analysis, building Probit model and regression model. The listed company which contemplates equity refinancing is the dependent variable, according to the forecast performance of listed companies to determine whether managers overconfidence, turnover measures market timing, the empirical results show that there is a positive correlation between overconfidence managers and listed companies raised equity refinancing applications and the refinancing of listed companies in China exists market timing. The next part is case study. And the last part is conclusion of this paper, Managers who are overconfidence will increase the probability of equity refinancing of the listed company. Meanwhile, the listed companies will seize the market opportunity for equity refinancing.