The Effect Analysis Of China Construction Issue Preferred Stock

In western market,due to the fast development of economy and the continuous innovation of finance,preferred stock financing has been widely used and won recognition in wide range.Like ordinary stock financing,preferred stock financing has become a universal financing way and played a great role as a financing method for corporations.Recently,Chinese capital market has got brilliant development,and complied with the requirements of the trend,preferred stock financing can further expand financing ways of Chinese capital market.The paper chooses China Construction,which is one of the first batch of listed companies that use preferred stock financing,as the research sample,then it collects and analyzes relevant full-on data and information of this company.Firstly,it analyzes the initiative of preferred stock plan of China Construction in regards of capital needs,financial obstacles and ways and introduce the preferred stock plan and process.Following that is the effectanalyzes,which adopt the comparative and event-study approach to analyze the cost,financial condition,ownership structure and market reaction after raising funds.According to the analysis,preferred stock financing can increase operational capital and optimize the capital and ownership structure,while has a positive influence to the stock market during a certain period.Finally,the paper gets the conclusion that based on the current economic background,preferred stock financing is a feasible way of the sample company and has a positive impact.And the paper suggest that similar enterprises can use similar financing strategies to guarantee the safety of companies' capital,so that enterprises can strengthen their ability of development and safeguard the rights and interests of the original shareholders.Although analyzed the relevant financial indicators,data and condition of China Construction,this paper is subjective and limited due to different situation of each company and the fact that China Construction is a typical large state-owned enterprise with only two years long preferred stock financing experience.Beside that,this paper only makes analysis and discussions on the aspects of cost and financing structure only.Thus,the empirical research in future should be expanded on the basis of profound data so as to have a better understanding of the development of preferred stock in capital market of China.