Study On Preference For Financing Of Chinese Listed Companies

In the market economy, financing is of utmost importance for modern companies, in which the way and the structure of financing are critical. Owing to the development of Chinese stock market, Chinese listed companies obviously prefer to choose equity financing, which is a special phenomenon in special stage and environment. This article makes a detailed study about the reasons and harmfulness of this phenomenon, and gives some suggestions on how to optimize the financing structure of listed companies.Firstly, the article makes a simple introduction to the basic theory of capital structure, and to the relationship between different financing behaviors and corporate governance.Secondly, the article analyzes the present situation of financing behavior of listed companies in China, and points out that listed companies always have excessive preference of equity financing to debt financing.Thirdly, the article deeply analyzes the causes of the preference for equity financing from inside and outside aspects, that is, the faultiness of corporate governance and the unperfect of the Chinese stock market, which directly lead to lower cost of equity financing than that of debt financing. Besides, the article studies the negative effect of the corporation s preference of financing from the following aspects: the efficiency of using capital, the interest of investor, the growth and administration of corporations, as well as macro-economic operation. The preference of equity financing is the result by the executive officer of listed companies to maximize their own benefits under multi-restrictive conditions.Finally, the article puts forwards some proposals to rationalize financing behavior of Chinese listed companies, including improving the structure of listed company and its governance, strengthening the monitoring on information disclosure of listed companies and speeding up the development of corporate bond market in China, etc.