Study on the financing preference of Chinese listed companies: based on the pecking order theory

Feng, Lihuan (2022) Study on the financing preference of Chinese listed companies: based on the pecking order theory. [Dissertation (University of Nottingham only)]

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Since the emergence of the pecking order theory, many studies have empirically investigated the financing behaviour of corporates based on this theory. A lot of researches identified that Chinese listed firms behaved against the pecking order theory and had equity financing preference, but some proved otherwise. The controversy may result from different empirical methods. In order to investigate whether the ‘equity financing preference’ exists in China, this essay examined the financing behaviour of Chinese listed firms after eliminating the influence of IPO, and studied how firms with different degrees of information asymmetry and different ownership properties behaved from 2011 to 2021.

There are three key findings from this study. Firstly, different from the pecking order theory, Chinese listed companies showed equity financing preference even if Initial Public Offering was not considered. Chinese listed firms prefer external financing than internal financing; and for external financing, they prefer equity financing than debt financing. Secondly, Chinese listed firms with low degree of information asymmetry are more inclined to internal financing; when it comes to external financing, firms with high degree of information asymmetry had less equity financing preference. Thirdly, the pecking order theory had better explanatory power for state-owned enterprises than private enterprises.

Item Type: Dissertation (University of Nottingham only)
Depositing User: FENG, Lihuan
Date Deposited: 07 Jul 2023 12:17
Last Modified: 07 Jul 2023 12:17

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