| China's capital market has made considerable progress in the past 30 years.But compared to foreign mature markets,the domestic capital market defects are very obvious.One of the defects is that China's listed companies prefer seasoned equity offering,which means China's listed companies' financing behavior is inconsistent with the pecking order theory.The financing behavior of listed companies does not only concern their own development,but also concerns the functions of the whole capital market which plays an important role in China's economy.Irrational equity financing preference would harm the economy both at microeconomic level and macroeconomic level.Therefore,the study of the financing behavior of listed companies is helpful to better the capital structure of the listed companies and to improve the external environment of the capital market.This paper studies and analyzes the equity financing preference of China's listed companies by theoretical and empirical methods.A lot of researches have been done in this field,beginning with Modigliani and Miller's capital structure theory,we review and summarize the western classical theory of corporate financing.This paper also introduces the history and current situation of the various financing instruments in China's capital market.Before the empirical analysis,we summarize the influencing factors on financing preference of China's listed companies in a theoretical way.Based on the previous research,this paper conducts a logit regression which is used to assess the influencing factors on financing preference of the listed companies.Furthermore,this paper studies the equity financing preference from the innovative perspective of corporate lifecycle.And we find that China's listed company at early stage of lifecycle prefers equity financing much more.This paper proceeds as follows.The first chapter presents the introduction of the research background,which is the financing behavior of foreign listed companies is mainly consistent with the pecking order theory,but the Chinese listed companies are not.Not like the foreign companies,Chinese listed companies prefer seasoned equity offering pretty much after their IPO.And we can say that China's capital market was born with this equity financing preference.Now the listed companies still like SEOs,but the whole situation is different from earlier.China's capital market has undergone great changes over the past decade,such as the equity division reform in 2005,corporate bonds launched in 2007,financial crisis in 2008.It is necessary to re-examine the equity financing preference of Chinese listed companies under the new market circumstances.Through this paper,we would like to achieve something such as having a deep understanding of equity financing preference in China,making specific recommendations for the development of China's capital market;at the same time,we would like to test some of the conclusions obtained by previous scholars with the data in a new period.Finally,this section describes the research ideas and research methods,we use both qualitative and quantitative research methods to analyze the various influencing factors on equity financing preference of the listed companies.The second chapter is literature review.First of all,we make a comprehensive and detailed exposition of financing theory in corporate finance.The main theories are the MM theory,trade-off theory,signal theory,agency cost theory and the pecking order theory.The MM theory is the most famous theory in the field of financing,which was built by Modigliani and Miller.The original MM theory thinks that the value of the company has nothing to do with the capital structure under the assumption of no tax and same business risk situation.The modified MM theory thinks that the rising debt ratio will increase the value of the company for tax shield effect of debt.Trade-off theory thinks that the company will choose the optimal capital structure to balance between the benefit of tax shield effect and bankruptcy costs.Signal theory thinks that the company will deliver about profitability and risk information through changing capital structure.Agency cost theory thinks that capital structure is all about control power,shareholders need to find a balance between the two factors of agency costs of equity and debt agency cost.The pecking order theory thinks that generally corporate makes financing decision following the internal financing,debt financing,equity financing in the order.Then,we summarize the previous empirical research both foreign and domestic.The third chapter is about the present financing situation of listed companies.The SEO of Chinese listed companies experienced three periods of allotment,public issuance,private placement.And bond market is relatively weak considering the strong preference of equity financing,fortunately we have seen the rapid development of corporate bonds in recent years.Through the history,we find that policy can determine the rise and fall of a financing method.In this chapter,we also analyze the factors affecting equity financing preference.We study the influencing factors from the perspectives of financial characteristics,cost of financing,insider self-interest,the limitation of bond market and the intent of regulators.As can be seen,China's listed companies' equity financing preference are affected by both internal factors and external factors.The fourth chapter is the empirical analysis part,we divide this section into three parts.The first part is making hypothesis and model specification.Based on the analysis above for equity refinancing preference,we make nine research hypotheses to be tested.We choose Logit model to do the empirical study based on the characteristic of our study and we describe and explain this model.The second part is the description of the data sample.We choose the data from CSMAR database,and the filtering process is very rigorous.Ultimately we get 3092 samples which are qualified for equity financing conditions.The third part is the result of the regression and analysis.We use statistical software of Statal2.0 to do the regression analysis,the results show that scale of company,free cash flow,debt ratio,overrun cost,excessive investment,P/B ratio,company's growth,liquidity ratio,ROE are correlated with equity financing preference of listed companies significantly,indicating the hypothesis we make above are verified empirically.The fifth chapter is about the empirical analysis from the perspective of corporate lifecycle.First,we use principal component analysis to decrease the numbers of variables,which are used to classify the lifecycle,and then we use fractile method to divide sample companies into 3 groups.From the distribution of companies' lifecycle,we find that most of China's listed companies which are qualified to issue equity are at stage of maturity.Logit model is still used to study the role of corporate lifecycle in financing behavior,and we find that China's listed company at early stage of lifecycle prefers equity financing much more.The sixth chapter is about the conclusions and recommendations.We summarize the conclusions from empirical research of the last 2 chapters.First of all,the construction of multi-level capital market weakens the equity financing preference of listed companies,but compared to developed countries,this preference is still very obvious.Second,reform of equity division and a series of market reforms have restrained hidden motives of equity financing preference,such as benefits expropriation by large shareholder and window of opportunity.Third,agency problem between the shareholders and the management will lead to equity financing behavior.Fourth,the bond market is still relatively weak,and the current imbalance of capital market makes listed companies in the financing needs tend to equity financing.Fifth,from the perspective of corporate lifecycle,China's listed company at the growth stage which means the early stage of lifecycle prefers equity financing much more.Finally,this paper gives some suggestions for optimizing financing behavior of listed companies.These suggestions include improving corporate governance structure,reinforcing dividend distribution,expanding the financing channels,strengthening investors' education and emphasis on market mechanism. |
PDF Full Text Request