Retest The Pecking Order Theory For The Shanghai And Shenzhen Companies

Financing is the most acts during a company's operation and expansion.Also it has been concerned by academic circles for long.In the 1970 s,Pecking order theory has become the most influential in the field of corporate finance.The core view of the pecking order theory is as follow.In a market of asymmetric information,the cost of bond financing is always higher than that of equity financing,so company should first choose internal financing,then select debt financing and finally consider equity financing under compelling circumstances.Most results of the empirical studies on mature Western markets are in line with the pecking order theory.However,series of empirical studies in the early 2000 s confirmed that the pecking order theory met great challenges in China capital market.After 2005,with the successful implementation of split-reform and the emergence of corporate bond market,the financing behavior of China's companies has changed a lot.China's economy is in the transition period,some state-run companies is controlled by state and their financing decision are affected by state.Based on pecking order theory,this paper discusses about financing preference and its influence factors of China's state-run companies and non-state-run companies.The main research works are included as following:(1)First,reviews the development of corporate financing theories,focusing on the theoretical model of pecking order theory and relevant empirical research.And describes that the financing mode of China's companies is changing in process.(2)Second,use the modified investment-cash sensitivity to study the financing behaviours of all sample companies,state-run companies and non-state-run companies.The research shows all sample companies,state-run companies and non-state-run companies vary with the level of investments.The preferences change after 2006.The preference of state-run companies and non-state-run companies are differently obviously with each other.(3)At last,we add the acquisition expenditures and research spending to further study weather the result different with the above results.