Research On The Causes And Effects Of Equity Financing In China Railway Enterprises

As a key infrastructure and major livelihood projects,railway plays an irreplaceable role in social development.For a long time,the main sources of railway construction funds are national budget and local government investment,while private capital and foreign capital are rarely involved.In recent years,China has increased its investment in railway construction.At present,the annual investment in railway construction in China remains above 800 billion yuan.As the representative investor of national railway,China National Railway Group Co.,Ltd.has total assets of 8.32 trillion yuan and total liabilities of 5.49 trillion yuan by the end of 2019,with an asset liability ratio of 65.98%.The large-scale railway construction has brought huge debt pressure to the country.The traditional financing method has been difficult to meet the capital demand of railway construction.The railway industry must seek new financing methods to achieve sustainable development.As an important way of financing,equity financing can effectively relieve the debt pressure of enterprises and improve the capital structure of enterprises.The equity financing behavior and its effect of railway enterprises are not only related to their own value creation and sustainable development ability,but also closely related to the development and stability of China’s national economy.This paper first introduces the situation of Beijing-Shanghai High Speed Railway Co.,Ltd.,including the background,development history,the main business and main business model,the special advantages of the company,and then introduces the basic situation of the equity financing of Beijing-Shanghai High Speed Railway Co.,Ltd..Then introduces Beijing-Shanghai High Speed Railway Co.,Ltd.equity formation and changes,further explore Beijing-Shanghai High Speed Railway Co.,Ltd.financing process and capital structure changes.Then it explains the reasons of equity financing of Beijing-Shanghai High Speed Railway Co.,Ltd.from the perspective of institutional background and policy support,the need of China National Railway Group Co.,Ltd.to alleviate debt pressure and the need of the company to implement business development plan.Finally,this paper analyzes the direct financing effect and indirect financing effect of Beijing-Shanghai High Speed Railway Co.,Ltd..The direct financing effect refers to the effect and result of Beijing-Shanghai High Speed Railway Co.,Ltd.’s equity financing at the company level.The indirect financing effect is to explore the impact of Beijing-Shanghai High Speed Railway Co.,Ltd.’s equity financing on railway industry.Through the research,this paper draws the following conclusions.The equity financing of Beijing-Shanghai High Speed Railway Co.,Ltd.has strong timeliness,low financing cost,low financing risk and positive use efficiency of the raised funds.The equity financing efficiency of Beijing-Shanghai High Speed Railway Co.,Ltd.is high,and the direct financing effect is good.The reasons for the listing of railway enterprises often include the institutional background and policy support,the need for China National Railway Group Co.,Ltd.to ease the debt pressure and the need for the company to implement the business development plan.The listed financing of railway enterprises helps to alleviate the debt pressure of China National Railway Group Co.,Ltd.,improve the capital structure of China National Railway Group Co.,Ltd.,and promote the securitization of railway assets.In addition,this paper puts forward concrete suggestions on the feasibility of other railway enterprises to "copy" the special advantages of Beijing-Shanghai High Speed Railway Co.,Ltd.,including combining themselves The situation chooses whether to draw lessons from the entrusted transportation management mode,deeply explores how to turn the design speed into the running speed,and attracts the private capital investment by adjusting the dividend distribution policy and raising the dividend ratio appropriately.Not only that,this paper also points out the main factors that affect the financing effect of railway industry,including too many related party transactions,the method of income liquidation is not open,and the marketization degree of fare pricing is on the low side.It has certain reference significance for other railway enterprises to perfect corporate governance and smoothly promote equity financing arrangements.