Study On Construction And Application Of Financing Costs Estimating System Of Chinese Enterprises

Resent years, enterprises in China had strong preference for equity financing, and our professors had tried different ways to explain it. This thesis thinks that financing cost is the determining fact of enterprises' financing, and the preference for equity financing is determined by the desire of low financing cost. Then, the key to solve the problem is to find out a scientific way to estimate financing cost exactly. So, this thesis makes a comprehensive study on the construction and application of financing costs estimating system with Financing Theory and reality of Chinese enterprises.First, give a simple introduction of enterprises' financing, analyze present situation of Chinese enterprises' financing activity, give new conceptions to relative financing costs according to Financing Theory, and then make further research depending on four code conceptions: Cost of capital, Arrangement Cost, Financial Distress Cost and Agency Cost.Second, analyze existing models of financing costs systematically, and discuss the application of these models from three aspects: hypothesis of model, securities market and the characteristics of enterprises. The result is: existing models are not suitable for Chinese enterprises, and direct use will not get the result we expected.Third, according to the characteristics of entity structure, dividend policy and debt structure, construct the estimating system of definite financing cost. The system includes entity financing estimating model of current stocks and incurrent stocks based on cash cost and promotion cost, and the estimating model of financing cost of returning earnings; the estimating model of debt financing including some short-time debt; and the estimating model of financing cost of whole enterprise based on weighted average. This thesis estimated the definite financing costs of sample Listed enterprises , the result is: there are 84% of all enterprises whose entity financing cost is higher than debt, and there are 87% of all enterprises whose cash cost of entity financing is lower than debt. So the conclusion is: enterprises have strong preferencefor entity financing because they only take cash cost into consideration. They believe that the entity financing cost is lower than debt financing cost, and the entity financing has less press of obligation.Last, based on the analysis of financial distress problem and agency cost, construct the estimating system of indefinite financing cost. There is no financial distress when enterprises carry out their financing, so it is the expected financial distress costs (EFDC) that have effect on financing decision. EFDC depends on two facts: probability of financial distress and the realized financial distress costs (RFDC). So, this thesis constructs an estimating model of financial distress costs with combination of Logistic and current assets ratio of enterprises. The existing of agency cost has diplex causes in China. After a deep analysis of its process, this thesis makes some change in the model of Jenson and Meckling and constructs an estimating model of agency cost. This thesis estimated indefinite financing costs of sample Listed enterprises, and analyze the choice of financing based on the indefinite financing costs. The result is: the best decision depends on the definite financing costs will probably change when we lake indefinite financing costs into consideration.This Thesis constructs an estimating system of financing costs by proper combination with Financing Theory and reality, and put it into application. It makes itself valuable to Chinese enterprises to estimate financing costs and make financing decision.