中国上市公司偏好股权融资：非制度性因素-毕业论文外文翻译.doc

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1、原文: Chinese Listed Companies Preference to Equity Fund: Non-Systematic Factors Abstract ：This article concentrates on the listed companies financing activities in China, analyses the reasons that why the listed companies prefer to equity fund from the aspect of non-systematic factors by using wester

2、n financing theories, such as financing cost, types and qualities of the enterprises assets, profitability, industry factors, shareholding structure factors, level of financial management and society culture, and concludes that the preference to equity fund is a reasonable choice to the listed compa

3、nies according to Chinese financing environment. At last, there are some concise suggestions be given to rectify the companies preference to equity fund. Keywords: Equity fund, Non-systematic factors, financial cost 1. Introduction The listed companies in China prefer to equity fund, According to th

4、e statistic data showed in , the amount of the listed companies finance in capital market account to 95.87 billions in 1997, among which equity fund take the proportion of 72.5%, and the proportion is 72.6% in 1998 and 72.3% in 1999, on the other hand, the proportion of debt fund to total fund is re

5、spective 17.8%, 24.9% and 25.1% in those three years. The proportion of equity fund to total fund is lower in the developed capital market than that in China. Take US for example, when American enterprises need to fund in the capital market, they prefer to debt fund than equity fund. The statistic d

6、ata shows that, from 1970 to 1985, the American enterprises debt fund financed occupied the 91.7% proportion of outside financing, more than equity fund. Yan Dawu etc. found that, approximately 3/4 of the listed companies preferred to equity fund in China. Many researchers agree upon that the listed

7、 companies outside financing following this order: first one is equity fund, second one is convertible bond, third one is short-term liabilities, last one is long-term liabilities. Many researchers usually analyze our national listed companies preference to equity fund with the systematic factors ar

8、ising in the reform of our national economy. They thought that it just because of those systematic facts that made the listed companies financial activities betray to western classical financing theory. For example, the “picking order” theory claims that when enterprise need fund, they should turn t

9、o inside fund (depreciation and retained earnings) first, and then debt fund, and the last choice is equity fund. In this article, the author thinks that it is because of the specific financial environment that activates the enterprises such preference, and try to interpret the reasons of that prefe

10、rence to equity fund by combination of non-systematic factors and western financial theories. 2. Financings cost of the listed company and preference to equity fund According to western financing the theories, capital cost of equity fund is more than capital cost of debt fund, thus the enterprise sh

11、ould choose debt fund first, then is the turn to equity fund when it fund outside. We should understand that this conception of “capital cost” is taken into account by investors, it is somewhat opportunity cost of the investors, can also be called expected returns. Itcontains of risk-free rate of re

12、turns and risk rate of returns arising from the investors risk investment. It is different with financing cost in essence. Financing cost is the cost arising from enterprises financing activities and using fund, we can call it fund cost. If capital market is efficient, capital cost should equal to f

13、und cost, that is to say, what investors gain in capital market should equal to what fund raisers pay, or the transfer of fund is inevitable. But in an inefficient capital market, the price of stock will be different from its value because of investors action of speculation; they only chase capital

14、gain and dont want to hold the stocks in a long time and receive dividends. Thus the listed companies can gain fund with its fund cost being lower than capital cost. But in our national capital market, capital cost of equity fund is very low; it is because of the following factors: first, the high P

15、/E Ratio (Price Earning Ratio) of new issued shares. According to calculation, average P/E Ratio of Chinese listed companies shares is between 30 and 40, it also is maintained at 20 although drops somewhat recently. But the normal P/E Ratio should be under 20 according to experience. We can observe

16、the P/E was only 13.2 from 1874 to 1988 in US, and only 10 in Hong Kong. High P/E Ratio means high share issue price, then the capital cost of equity fund drops even given the same level of dividend. Second, low dividend policy in the listed companies, capital cost of equity fund decided by dividend

17、 pay-out ratio and price of per share. In China, many listed companies pay little or even no dividends to their shareholders. According to statistic data, there were 488 listed companies paid no dividend to their shareholders in 1998, 58.44 percents of all listed companies, there were 590, 59.83 per

18、cents in 1999, even 2000 in which China Securities Regulatory Commission issue new files to rule dividend policy of companies, there were only 699 companies which pay dividends, 18.47 percents more than that in 1999, but dividend payout ratio deduce 22%. Thus capital cost of equity is very low. Thir

19、d, there is no rigidity on equity fund, if the listed companies choose equity fund, they can use the fund forever and has no obligation to return this fund. Most of listed companies are controlled by Government in China, taking financing risk into account, the major stockholders prefers to equity fu

20、nd. The management also prefer equity fund because its lower fund cost and neednt to be paid off, then their position will be more stable than financing in equity fund. We can conclude from the above analysis that cost of equity fund is lower than cost of debt fund in Chinese listed companies and th

21、e listed companies prefer to such low-cost fund. 3. Types and qualities of assets in listed companies and preference to equity fund Static Trade-off Theory tells us, the value of enterprise with financial leverage is decided by the value of self-owned capital; value arising from tax benefit, cost of

22、 financial embarrassment and agency cost. Cost of financial embarrassment and agency cost are negative correlative to the types and qualities of companies assets, if the enterprise has more intangible assets, more assets with lower quality, it will has lower liquidity and its assets have lower mortg

23、age value. When this kind of enterprise faces to great financial risk, it will have no way to solve its questions by selling its assets. Furthermore, because care for the ability of turning into cash of the mortgage assets, the creditors will high the level of rate and lay additional items in financ

24、ial contract to rule the debtors action, all of those will enhance the agency cost and deduce the companies value. Qualcomm is supplier of wireless data and communication service in America, it is the inventor and user of CDMA and it also occupies the technology of HDR. The market value of its share

25、 is 1120 billions dollars at the end of March, 2000, but the quantities of long-term liabilities is zero. Why? Some reasons may be that there are some competitors in the market who own analogous technologies and the management of Qualcomm Company takes conservative attitude in financing activities.

26、But the most important factor may be Qualcomm Company owns a mass of intangible assets which will have lower convertibility and the companys value will decline when it has no enough money to pay for its debt. Many listed companies in China are transformed from the national enterprises. In the transf

27、ormation, these listed companies take over the high-quality assets of the national enterprises, but with the development of economy, some projects can not coincide with the market demand and the values of relative assets decline. On the other hand, there are many intangible assets in new high-tech c

28、ompanies. State-owned companies and high-tech companies are the most parts of the capital market. We can conclude that the qualities of listed companies assets are very low. This point is supported by the index of P/B (Price-to-Book value) which is usually thought as one of the most important indexe

29、s which can weigh the qualities of the listed companies assets. According to statistic data coming from Shenzhen Securities Information Company, by the end of November 14, 2003, there were 412 companies whose P/B is less than 2, take the 30% proportions of total listed companies which issue A-share

30、in China, among them, there were 150 companies whose P/B is less than 1.53, and weighted average P/B of the stock market is 2.42. Lower qualities of assets means more cost may be brought out from debt fund and lower total value of the listed companies. Thus the listed companies prefer to equity fund

31、 when need outside financial support in China. 4. Profitability and preference to equity fund Financial Leverage Theory tells us that a small change in companys profit may make great change in companys EPS (Earnings per share). Just like leverage, we can get an amplified action by use of it. Debt fu

32、nd can supply us with this leverage, by use of debt fund, these companies which have high level of profitability will get higher level of EPS because debt fund produces more profit for shareholders than interest shareholder shall pay. On the contrary, these companies which have low level of profitab

33、ility will get lower level of EPS by use of debt fund because debt fund can not produce enough profit for shareholder to fulfill the demand of paying off the interests. Edison International Company has steady amount of customers and many intangible assets, these supply it with high level of profitab

34、ility and ability to gain debt fund, its debt account to 67.2% proportions of its total assets in 1999. Listed companies in developed countries or regions always have high level of profitability. Take US for example, there are many listed companies which have excellent performance in American capita

35、l market when do business, such as J.P Morgan, its EPS is $11.16 per share in 1999. Besides it, GM, GE, Coca Cola, IBM, Intel, Microsoft, Dell etc. all always are profitable. In Hong Kong, most of those companies whose stock included in Hang Sang Index have the level of EPS more than 1 HKD, many are

36、 more than 2 HKD. Such as Cheung Kong (Holdings) Limited, its EPS is 7.66 HKD. But listed companies do not have such excellent performance in profitability in China inland. Their profitability is common low. Take the performance of 2000 for example, the weighted average EPS of total listed companies

37、 is only 0.20 Yuan per share, and the weighted average P/B is 2.65 Yuan per share, 8.55 percents of these listed companies have negative profit. With low or no profit, the benefit nixes, listed companies preference to equity fund is a reasonable phenomenon. Can be gained from debt fund is very littl

38、e; the listed companies can even suffer from the financial distress caused by debt fund. So with the consideration of shareholders interest, the listed companies prefer to equity fund when need outside financial support in China. 5. Shareholding structure factors and preference to equity fund Listed

39、 companies not only face to external financing environmental impacts, but also the structure of the companies shares. Shareholding structure of Chinese listed companies shows characteristics as followed: I. Ownership structure is fairly complex. In addition to the public shares, there are shares hel

40、d with inland fund and foreign stocks, state-owned shares, legal person shares, and internal employee shares, transferred allotted shares, A shares, B shares, H shares And N shares, and other distinction. From 1995 to 2003, Chinese companies outstanding shares of the total equity share almost have n

41、o change, even declined slightly. II. There are different prices, dividends, and rights of shares issued by same enterprise. III. The over-concentration of shares. We use the quantity of shares of the three major shareholders who top the list of shareholders of the listed companies to measure the co

42、ncentration of stock. We study he concentration of stock of these companies which issue new share publicly in the years from 1995 to 2003 and focus on the situation of Chinese listed companies over the same period. The results showed that: from 1995 to 2003, the company-Which once transferred or all

43、otted shares-whose top three shareholders shareholding ratio are generally higher than the average level of all the listed companies, and most of these companys top three shareholders holding 40 percent or higher percent of companies shares. In some years, the maximum number even is more than 90 per

44、cent, indicating that the company with the implementation of transferred and allotted shares have relatively high concentration rate of shares and major shareholders have absolute control over it. In short, transferring allotting shares and the issuance of additional shares have a certain relevance

45、to the companys concentration of ownership structure; the companys financing policy is largely controlled by the major shareholders. Chinese listed companies special shareholding structure effects its financing action. Because stockholders of the state-owned shares, legal person shares, social and o

46、utstanding shares, foreign share have a different objective function, their modes of financing preferences vary, and their preference affect the financing structure of listed companies. Controlling shareholders which hold state-owned shares account for the status of enterprises and carry out financi

47、ng decisions in accordance with their own objective function. When the objective function conflict with the other shareholders benefit, they often damage the interests of other shareholders by use of the status of controlling. As the first major shareholders of the companies, government has multiple

48、 objectives, not always market-oriented, it prefers to use safe fund such as equity fund to maintain the value of state-owned assets, thus resulting in listed companys preference to equity financing. Debt financing bring business with greater pressure to pay off the par value and interests. Therefor

49、e, the state-owned companies are showing a more offensive attitude to debt fund, again because of Chinese state-controlled listed companies have the absolute status in all listed company. From: International Journal of Business and Management; October, 2009. 译文： 中国上市公司偏好股权融资：非制度性因素 摘要：本文把重点集中于中国上市公司的融资活动，运用西方融资理论，从非制度性因素方面，如融资成本、企业资产类型和质量、盈利能力、行业因素、 股权结构因素、财务管理水平和社会文化，分析了中国上市公司倾向于股权融资的原因，并得出结论，股权融资偏好是上市公司根据中国融资环境的一种合理的选择。最后，针对公司的股权融资偏好提出了一些简明的建议。 关键词：股权融资，非制度性因素，融资成本 一、前言