Research On Factors Affecting The Financing Preferences Of Chinese Listed Companies

Most of the listed companies in China was restructured by the original state-owned enterprises, and the stock market hasn’t been preliminarily constructed until1992. After more than20years’development, there are still many imperfections of the listed companies in our country. With the development of market economy in our country, financing is of great significance to the development of an enterprise, and the corresponding financing structure cannot be ignored either. Therefore, many scholars focus their research on financing structure. The financing structure is the composition and proportion relationship which obtained by companies through different financing channels. It decides the development direction of company’s financing channels.Firstly, this paper summarizes how domestic and overseas scholars study financing structure, which contains theoretical basis and latest literature. Secondly, based on the data analysis of the current situation of Chinese listed companies, I have made a comparison between China and other countries, including developed and developing countries. After all these data analyses, we can obviously find the equity financing preference of Chinese listed companies. Thirdly, this paper innovatively sets transaction cost as key explanatory variable, and then selects firm size, industry, corporate growth, profitability, collateral value of assets and non-debt tax shields, etc., as controlled variable to explain factors affecting the financing structure.This paper chooses the listed companies in China from1992to2012as sample panel data, and then analyzes the data with fixed-effect model and random-effect model. The Hausman test supports the fixed-effect model. Most of the indexes show significant influence on the financing structure. The coefficient of the key variable transaction cost is significant and large, which supports the above conjecture, i.e., the higher transaction cost of our country is the main reason for the equity financing preference of the listed companies. In order to prove the final conclusion, this paper selects different indexes to measure the key variable, transaction cost, for robust test, which shows consistent results with that of the above fixed-effect. In addition, considering the potential endogeneity of transaction cost, this paper adopts instrumental variables to solve the endogenous problem hoping to obtain the consistent estimated results. However, there exists no endogenous problem which means we can still take the results of the above fixed-effect. In accordance with the main results above, we can put forward some related policy implications, such as to improve the corporate governance structure, to speed up the development of the bond market, to support the improvement of small-micro enterprise and to strengthen the supervision of listed companies, etc..