Discussion On Financing Peck Order Of Chinese Listed Companies

Since the opening of Chinese capital market in1990, listed companies’ capital structure and financing preference is always one of the core topics of academic interest for domestic scholars. Different from the pecking order of " internal over external, debt over equity" in developed market, Chinese scholars find local listed companies prefer external money to internal cash, equity to debt, and discuss the potential reasons.This paper summarized the financing structure of domestic listed companies since2003, and found that the major financing source still comes from external ones, leading by bank loan while the internal part is catching up every year. However, after "Corporate Bond Issuance Pilot Approach" was promulgated in2007, the corporate bond market has enjoyed a golden period of growth, the ratio of bond financing rises up quickly. In2012, first time in history, bond took equity’s position as the most preferred way of direct financing for listed companies. The so-called "financing preference of equity" has changed.Starting from the phenomenon, based on corporate finance theories, this paper filtered and selected potential variables affecting companies’ financing choice, collected tons of data to find and analyze the reasons behind their choices between internal and external, bond or stock, with the help of multiple regression and logit regression. According to the findings, this paper also proposed some policy suggestion to help optimize companies’capital structure and promote the efficiency of resource allocation at the same time.