Equity Financing Preference Of Listed Firms In China From The Perspective Of Financing Development And Its Effect On The Firms' Profit

This paper tries to analyze the effect of financial market to the corporate financing structure using firms' financial statement indicators and macro level financial development indicators data set and get the firms' financing preference,and then further analyses the effect of different financing ways to the firms' profit in different industries and get that it is not the case that the more equity financing the firm get,the more profit they will make.Although firms are mostly inclined to equity financing,firms in some industries can get benefit from debt financing like long term debt or short term debt.This provides reference for firms' financing choice for different industries.In the concrete framework,we first introduce the development of the financing market in our country.In the previous study,they mostly used the stock market development and bank market development to represent the development of the financial market.But we know that as the development of the financial market,many non bank intermediaries like the credit cooperatives and guarantee corporation appear and bring a large amount of loaning scale.So here we make some improvements and analyze the development of depositary financial institutions including bank.This part makes us think that in those all financing ways,firms must have their preference and so in the second we analyze the effect of financial development to the firms' financing structure.In this part we select the stock market indicators like stock market capitalization and trading volume to measure the scale and liquidity separately.And about the depositary financial indicators,we use the loaning scale and generalized money to measure the scale of those intermediaries.In this part we find that the listed companies in our country are inclined to finance by equity financing,that is by issuing stocks in the market.Further we make the statistical analysis of our data set and get that the equity financing accounts for more than one half and debt financing only accounts for a small percentage.This also proves the equity financing preference of manufacturing listed firms in our country.No scholars have done this before as I know.But in the second part,we find that not all the firms in different industries can get benefits from the equity financing.So this paper provides reference for the firm's financing and for the country's policy implement.Financing decisions have gained much attention in finance literature over the years since the seminal works of Modigliani-Miller(1958,1963),hereafter referred to as MM capital structure irrelevance propositions.These financing decisions vary from country to country,partly explained by institutional and legal environment as well as macroeconomic factors.Most of the studies on the capital structure have been conducted in the context of developed and industrialized nations.But the research in our country still need to be perfected.So this thesis has some innovation both in the data processing and empirical study,and means a lot.