Analysis Of Motivation And Effect Of China Communications Construction Co.Ltd Issue Preferred Stock

With the development of capital market and the innovation of financing tools,many new financing methods are developing rapidly.Because of the characteristics of common stock financing and bond financing,preferred stock financing has a high degree of recognition in the field of foreign financing.In recent years,Chinese economy has developed rapidly,but in the capital market it is difficult to meet the financing needs of enterprises because of the limited financing methods.Therefore,it is necessary to introduce preferred stock financing to build diversified financing channels.The State Council issued The Guidance on Developing Preferred Stock Pilot on November 2013,which lays the foundation for the pilot of preferred Stock in China.China Securities Regulatory Commission issued Preferred Stock Pilot Management Measures,for the preferred stock financing of enterprises in China to provide institutional protection.Since the pilot work on preferred stock had been carried out,it had attracted attention from all concerns.From 2014 to 2017,a number of companies had successfully issued preferred shares for financing.Based on the domestic and foreign literature research,this paper selects China Communications Construction Co.Ltd to issue preferred stock as the case object,through collecting and analyzing the related announcements,company annual report and data,the paper analyzes the situation and effect of the company issuing preferred stock.In the case analysis part,it introduces the financing and issuing plan,the process and the object of the company issuing preferred stock,combs and analyzes the external issuing conditions of the company when issuing the preferred stock,and makes use of the comparative analysis,qualitative and quantitative analysis.Quantitative combination method is the internal motivation of issuing preferred stock.On the basis of some report data and announcement data before and after the issuance of preferred stock in China Communications Construction Co.Ltd,this paper analyzes the influence on economic effect of the company after issuing preferred stock.This paper analyzes the abnormal return rate of stock price change before and after issuing preferred stock plan by the method of event research,and proves the positive market reaction after the company chooses preferred stock financing.Finally,the paper analyzes the possible risks in the process of issuing preferred stock and puts forward corresponding countermeasures and suggestions.Based on the analysis of the motivation and effect of preferred stock issued by China Communications Construction Co.Ltd,this paper finds that the main reasons include the increasing demand for capital caused by the rapid development of the company,and the high asset-liability ratio caused by the former financing dependence on interest-bearing liabilities.In the aspect of choosing equity financing and other internal requirements under the premise of maintaining equity structure,the company has played an active role in replenishing project funds,perfecting financing structure and maintaining equity structure after the company issued preferred shares successfully.These effects and the company's motivation to issue the basic consistency.By analyzing the abnormal rate of return on the stock price change of common stock before and after the announcement of preferred stock issued by the company,the results obtained in this paper are as follows: After the announcement of preferred shares,the company's share price rose in the short term,raising the conclusion of shareholders' short-term wealth effects.There are also some risks in the issuance of preferred stock,so it is necessary for the company to choose the appropriate financing method according to its own situation before issuing,to formulate the issue plan suitable for its own financing needs,and to choose the right issuing time.Take care to avoid possible risks after issuance.Based on the theoretical basis and the case study,this paper puts forward some enlightening suggestions to the issuers,investors and relevant government departments of preferred stock,which will contribute to the development of preferred stock in China.