Research On Preferred Stock Financing Of Railway Construction Projects

As we all know, oil is the blood of industry, coal is the food of industry, power industryis the driving force, and the railway is not only important national infrastructure but also themain artery of the national economy. Railway transport capacity and development of thenational economy showed a positive correlation between the volume. The faster economicdevelopment, the greater the national demand for railway services. Despite the vigorousdevelopment of the railway business in recent years, but according to population, the roadnetwork density is still only0.56km/per million (while the United States is about5.6km/per million),5.6cm per capita, less than half a pencil length, obviously does not meet thenational demand. The root cause is the shortage of railway is serious shortage of funds forrailway construction. The traditional model has been far away from being able to meet thefinancing needs of railway construction and development, in the new situation requires a newmodel of research and study conditions which suitable for railway construction financing.From the point of domestic pilot and the experience from abroad, one of the effectivemethod of raising funds is issuing preferred stocks. Railway construction does not require alot of money, whether Britain or the United States, they mainly rely on the issue of preferenceshares. Whether China Railway Construction can also take issue preference shares to raisefunds needs take the reality of our country into consideration.Under the basis of summarizing the results researched by foreign scholars, elaboratingthe definition of preferred stock, characteristics, classification, function and shortcomings.According to the problems of railway construction project financing based on the currentstatus quo and advanced experience from foreign financing preference shares, preferred stockfinancing railway construction projects drawn is necessary, feasible and concrete operationalthinking creatively:⑴Three modes of preferred shares issued: new hair preferred shares,additional foreign preference shares, ordinary shares placement preference shares;⑵Designissue: quantitative restrictions preference shares, type design, the dividend yield is determined,the design preferred stock rights. At the same time, pointed out the Special Considerationswhich the issue of preference shares should be taken into: The establishment of a legal basis,accounting methods, tax relief policies.By contrasting with inner research results, this paper owns its opinions in the followingways： Firstly, specific operational thinking of preferred stock financing. Review railwayconstruction project financing preference shares, although the country has a lot of research,in-depth study of specific aspects of operational thinking has not been found yet.Secondly, to propose the preferred stock financing should pay particular attention. Theproblem and proposal from legal, accounting, tax policy can be referenced.Although research in less information for reference and difficult to collect andinadequate reasoning inevitably imperfect, the final conclusion can’t be verified in the currentconditions, there is no doubt that preferred stock financing is feasible in the construction ofthe railway project and has promising development.