Analysis Of Capital Structures And Implicit-Cost Of Financing Of Chinese Enterprises

To primarily understand the discrepancy of capital structures among different firms is important, not only for decision maker to manage and optimize capital structure dynamically under different social environment, but also for government to support enterprise and optimize financing environment. Chinese enterprises are in a special transitional period, which is different from western companies. Moreover, Empirical study has found out that financing cost and preference vary according to different areas, industries, scales and lifecycles, and that remarkable differences in the structure of cost also exist among listed companies ,unlisted companies and small non-public companies. The status quo and characteristics of capital structure are analyzed; and it is also explained why the diversified capital structures in the largest developing transition economy is paradoxical to the modern capital structure theory. It comes to the conclusion that "with huge difference in real financing cost, enterprises show their preference in minimizing the cost", which can give explanation to the multiplicity of capital structure in Chinese enterprise. To re-understand financing cost, a combination of 3 points is made as follows: 1) Integrating financing implicit-cost with financing decision; 2) Integrating diversity of capital structure with difference in financing cost; 3) Combining different financing preference with financing environment analysisBased on above three combinations, suggestions for enterprises are made on financing decision in order to maximize company value.The main research contents are as follows:1. The development history of capital structure, the summary of theoretical and empirical study fruit, the test of static tradeoff and pecking order models of capital structures2. The diversity and flexibility of capital structure are analyzed. The proportion of internal and external financing ,stock financing and loan financing will be different due to various areas, economic condition, financing regulation ,scale, industrial competition and governance structure. On the other hand, to the same enterprise, financing decision has to be changed with the development of financing tools and market development, which is called capital structure flexibility.