Study On Chinese Enterprises Financing Cost Estimation And Control

The capital is the blood of the enterprises, and financing is essential for thedevelopment of all the enterprises. The cost of different ways of financing is not the same.Financing cost is an important factor which can affect corporate financing decision. Thus,the possibility of scientific and accurate estimation of the financing cost is key to thedevelopment of the financing decision. Based on the observation, combined with thespecific characteristics of Chinese enterprises, this paper build the cost estimation model ofcorporate finance, and put forward suggestions to control the financing cost, which is underthe guidance of modern finance theory.This paper analyzed the practical significance of the study of financing cost，anddivided the financing cost into explicit and implicit cost, cleared the distinction between thecost of capital and financing cost, the cost of financial distress and agency cost, and pointedout the existing models can not play roles in Chinese enterprises.On the basis of thisshortcoming, firstly, adhering to the basic idea of modern finance theory and under theguidance of the two principles of rationality and operability, the paper constructed thefinancing dominant cost estimation model, including the models of equity financing costestimation, the debt financing cost estimation and the total financing cost estimation, andselected the data of25listed companies in Shanghai and Shenzhen stock market for testing,which float market capitalization is the largest. Then, on the basis of in-depth andmeticulous research of the root causes of the corporate financial distress cost and agencycosts, the paper built the corporate implicit financing cost estimation model, including themodels of financial distress cost and agency cost estimation, and tested using theaforementioned data. Finally, on the basis of the foregoing test results, this paper putforward the suggestions to control the financing cost, in order to function together with thefinancing cost estimation model to help companies better develop the financing decision. This study is based on the reality of features of Chinese enterprises, on thecomprehensive analysis of the influencing factors of the financing cost, and under theintegrated influence of various factors, we constructed the financing cost estimation modelwhich is suitable and meaningful for the estimation and control of Chinese corporatefinancing cost.