An Empirical Study On The Causes Of The Phenomenon Of Inverse "Preferential Order Financing" In Chinese Enterprises

Enterprise financing is often faced with choices and financing preferences.The process of financing is a process of resource allocation.Different choices bring different financing costs and financial risks.Enterprises can usually obtain funds through internal and external financing.When the internal financing of enterprises can not meet their own production and operation needs,it is particularly important to select appropriate external financing channels to raise funds.Based on the asymmetric information theory and considering the existence of transaction costs,the "theory of preferential order of financing" in the traditional western economy holds that equity financing will convey the negative information of enterprise operation,and that external financing will pay more for various costs.Therefore,enterprise financing generally follows the sequence of endogenous financing,debt financing and equity financing.However,listed companies in China prefer equity financing when choosing financing methods contrary to the classical theory of preferential order.In this context,through the empirical analysis of the medium-term and long-term loan market of banks and IPO in stock market,this paper explores whether the strong preference for equity financing is related to adverse selection in the market,and further analyses the influencing factors of equity financing and its origin.Some suggestions for improvement are put forward.