The Impact Of Non-bank Listed Company’s Preferred Stock Financing On Corporate Performance

Preference shares is a type of shares that can enjoy company profits and surplus property first.It originated in the United Kingdom in the 18 th century and is currently mature in developed financial markets such as Europe and the United States.Although the origin of preferred stocks is early,due to China’s special institutional reasons,its development in China has only started since the introduction of the 2014 "Preferred Stock Pilot Administrative Measures",so it is a new type of financing tool in the domestic capital market.Preferred stocks have developed rapidly in China in recent years,but the scale and increment are still far behind those of developed countries such as the United States.In addition,among the preferred stocks listed in Shanghai and Shenzhen,bank preferred stocks account for the vast majority,and non-bank listed companies have priority.The number and size of shares are very small.Based on the above background,it is particularly important to study preferred stocks,especially those of non-bank listed companies.This article firstly sorts out and summarizes the literatures of domestic and foreign scholars on the research of preferred stock financing,and briefly analyzes the status of preferred stock financing in China on the basis of elaborating the concept and related theories of preferred stock financing.Furthermore,the preferred stock financing plan of MuYuan shares in this case is analyzed,including the typicality of the case company,the situation of the company before the issuance,the process and overview of the preferred stock issuance,etc.Focused and in-depth research was conducted on the impact of preferred stock financing on company performance,including market response,financial effect and company value effect.By analyzing the case of MuYuan’s preferred stock financing,this paper draws the following conclusions: First,the market response of MuYuan’s preferred stock financing is negative,and the market is not optimistic about the company’s plan for the issuance of preferred stock.Second,the company’s value has declined a year after the issuance of preferred shares,and Tobin’s Q and EVA values both declined after the issuance of preferred shares.Third,after the issuance of preferred stocks,the financial situation was differentiated.The solvency first improved,then deteriorated,the operating capacity was improved,and the profitability and growth capacity declined significantly.According to the research results,this article puts forward the following suggestions for preferred stock financing of listed companies: First,listed companies with high asset-liability ratios or stable control needs are more suitable for issuing preferred stocks;second,listed companies should focus on the cost of preferred stock financing;Third,the timing of issuance of preferred shares should be selected reasonably;Fourth,the funds raised from preferred shares should be used efficiently.The possible innovation of this article is to conduct a more systematic evaluation of the impact of listed company preferred stock financing on company performance,including three aspects of market response,company value and financial effect.At the same time,a multi-level analysis based on factor analysis method was carried out in financial evaluation.The comparative analysis simplifies the complexity and excludes the influence of some other factors.The shortcoming of this article is that the time period set for investigating the impact of preferred stock financing is too short to measure the longer-term impact of preferred stock financing on company performance.At the same time,the case analysis is unique and its conclusions may not be generalized to all companies.