A Study Of Refinancing On Listed Company And The Influences On Companies' Performance

Capital injection, as the major propelling force for economic activities, contributes much to an enterprise for its foundation, existence and development. Public companies secure more finance through stock markets, which enables themselves to expand and develop continually. In fact, until 2007 the fund obtained from stock markets has amount to 824.307 billion Yuan. Admittedly, the capital does accelerate and guarantee the development of the public companies.But many problems are also exposed in the course of refinancing: the intention to make a quick bulk by stock financing, the abuse of capital to invest financial product, which disturb the stock market order on financing as well as the justice of allocation and competition. Accompanying every refinancing through stock market, the share price never fails to fall sharply. For instance, until Feb. 20^th 2008, 44 public companies raise preliminary scheme of refinancing, which is altogether as high as 260 billion Yuan. The enormous amount issued by Ping An Insurance Company of China constitutes a main factor of sharp fall of stock markets. The key for enterprises to refinance is to make certain the rational capital structure, finding the balance point between the control of financing risk, cost and the maximum proceeds. To realize their long term goal and maximize benefits of their shareholder, the public companies should choose the proper one among the various refinancing channel according to the practical factors and avoid making it a tool for quick bulk.The paper makes a systematic review of refinancing evolution course and the comparison between share allotments, newly issued share, transferable bond. The scale of refinancing and problems exposed are analyzed with the incorporation of quantitative and qualitative analysis methods. With the share allotment, newly issued share, transferable bond of listed companies in 2002-2004 stock market as the sample and the 2 year before and after financing as the case analysis, the author makes a study of the influence of stock financing on company's income and concludes that after refinancing enterprise's income will slide down.The author also makes an analysis of the causation of the problems arising in the course of refinancing and forwards some valuable measures such as improve managing structure of artificial persons in public companies, set multi-parameter system to censor the refinancing application, promote bond market and develop institutional investors etc.