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Equity Financing Regulation and the Optimal Capital Structure: Evidence from China
Beijing Normal University, Beijing, China
Tsinghua University, Beijing, China
- 1 Beijing Normal University, Beijing, China
- 2 Tsinghua University, Beijing, China
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Abstract
The “Supply-side effect” on financial management caused by market imperfection has increasingly been concerned. During the transition period, there is strict securities regulation in China’s capital market, which brings the supply-side constraints to corporate financing. Using the data of listed companies those take secondary equity offerings between 1993-2007 in China’s A-share market, the paper examines how the change of regulation policies on SEOs affects cor-porate financing decisions. Our result shows that regulation policy is a significant factor to the amount of refinancing and the optimal capital structure. This result provides important evidence on how the equity regulation environment affects corporate financial management.
KeywordsEquity Financing RegulationSupply-Side EffectCapital Structure
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