The Research On Preferred Shares-Based On The Analysis Of Guanghui Energy Limited By Share Ltd

Preferred stock financing has been widely used in Western countries. In 2014 China officially allowed preferred stock financing. In order to rescue the market, The United States used the way of financing preference shares a lot after the financial crisis in 2008. Companies can continue to lower the debt ratio of enterprises, but does not affect the controlling stake of existing shareholders in the enterprise when they take Preferred stock financing as the Preferred stock has the features of both debt and stork.making China’s financial market also has been greatly affected by financial crisis and unable to meet the needs of companies’ financing through traditional ways of financing. Guanghui Energy is the first company who issued to take preferred shares followed by six companies, and China Securities Regulatory Commission had authorized the requisition. In this paper, taking Guanghui energy as the object, analyze the reasons for its issuance of preferred stock, the expected effects and risks. This paper aims to give other listed companies which may issue preference shares in the future some related consultations and making exploration to expand financing channels for Chinese enterprises.This paper firstly summarizes the research results of scholars on preference shares, lists its definition, characteristics, classification, function and shortcomings, makes a comparison between different financing methods, Then Cites expected effects and risks which are grounded on realities of situation and speculative knowledge. Guanghui energy can improve the company’s capital structure and meet the needs of a large number of long-term funding for investment by taking Preferred stock financing. It is not suitable for every company cause it will increase the risk of common shareholders. In Guanghui Energy’s case, taking Preferred stock financing is a right decision.