Research On The Relationship Between Debt-equity Choices And Holding Period Yield

This paper mainly studies whether the stock price of the listed company will be affected by its decision on equity and debt.Generally speaking,a company issuing additional shares means that it thinks the stock market is being overvalued because when the stock price is overvalued,the company gains greater incentive to issue additional shares to get more capital.When the company's stock price is being undervalued,due to the potential impact of equity incentives on the interests of the company's management or shareholders,the company is more willing to buy back its shares,thereby sending signals to the market that the company is optimistic on its future,and guidance on raising the share price.So similar logic on bond market.Therefore,a company's decision to change its equity and debt may be a reflection of the company's expectations for the future.If this logic is set up,the company's decision on changing its equity and debt will change people's future expectations on the company and thereby changing the stock price due to the signal effect.If the change in expectations is correct,it is possible to predict the holding period return of the company's shares for the next fiscal year.However,because of the asymmetrical information in the market,it is difficult to accurately predict the decision of the company,thus the difference of expectation can also reflect the market cognition.Therefore,to explore whether there is a significant impact on the holding period rate of return and the short-term rate of return after the announcement of the annual report by the change of the company's equity and debt,can partly reflect the company decision logic on market investors' information transmitting,and the effectiveness of stock price management.Therefore,in the empirical part,this paper examines whether the decision of stock ownership and debt change of listed companies in our country will have an impact on holding period return rate and short-term return rate based on the fiscal year since the reform of non-tradable shares.By controlling R & D investment and other variables,we find out that if the equity financing and long-term debt financing increase in the fiscal year,the return rate based on the holding period of the fiscal year will decrease,and the short-term return rate will also fall after the annual report announcement.Meanwhile,if the company reduces its net long-term financing,especially on reducing more equity financing,which means share buy-back,then the company will increase the return on the holding period.At the same time,two other conclusions can be found from the results: Blue chips performed better in rate of return;China's stock market has not yet formed a reasonable understanding on R & D investment.The conclusion of this paper is similar to some studies in abroad,but the investment in R & D is quite different at home and abroad.To the stock price management of the company,no matter it is buy-back or additional issued,the market will react correspondingly,which makes the stock price management meaningful.