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Financing Preference Study The Impact Of Over-Investment Under The Ownership Concentration Conditions

Posted on:2016-02-11Degree:MasterType:Thesis
Country:ChinaCandidate:S Y WangFull Text:PDF
GTID:2309330467477246Subject:Accounting
Abstract/Summary:PDF Full Text Request
In the company’s financial management, investment decisions and financing decisions are the two core parts. Financing decisions determine the source of enterprises’funds, which are the basic protection of daily operations. The investment decision is about how to use this fund to ensure the efficient. These two parts are interdependence and mutual influence on each other. Since the MM theory proposed, information economics and principal-agent theory and other related theories enriched the research of investment and financing theory. Based on the principal-agent theory, asymmetric information and moral hazard are the inner-motivation of investment decisions and financing decisions. In previous researches, we always attribute the correlation between investment and financing to the agency conflicts between shareholders, managers and creditors. However, these studies are based on the developed capital market. Due to the China capital market is under development, the ownership structure of listed companies is more concentrated than diffused. In this situation, the agency conflicts between shareholders and managers are likely to be ignored, and the conflicts between large shareholders and minority shareholders are playing more important roles.Unlike previous researches which based on the dispersed ownership, this paper take ownership concentration as background, carried out the theoretic study and demonstrative analysis to the impact of different financing methods to the over-investment behaviors. And then this article discussed the role of ownership concentration in order to show how financing preferences affect the over-investment behaviors. The research results showed that ownership concentration is the major reason of enterprises to choose equity financing, and the degree of equity financing has a positive correlation to the over-investments. The article also found that debt financing, under ownership concentration situation, will restrain the over-investment behaviors. This inhibitory effect weakened along with the rise of ownership concentration and not obvious in the dispersed ownership situation. The results of this paper can be explained to some extent affect ownership concentration is an important investment and financing decisions motivation. Its performance is important is the existence of equity financing preference, and this preference will increase the over-investment situation of enterprises.
Keywords/Search Tags:ownership concentration, equity financing, debt financing, over-investment
PDF Full Text Request
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