,Equity financing constraints and corporate capital structure:a model

• 作 者: Zhengwei Wang Wuxiang Zhu
• 机 构: PBC School of Finance, Tsinghua University, Beijing, China and SEBA, Beijing Normal University, Beij
• 出 处: 中国金融评论（英文版）
• 发表日期: 2013年4期
• 关键词: Capital structure Corporate financing Equity financing preference Equity financi

Purpose-The supply-side effect brought about by the imperfection of the capital market has increasingly been conced.The purpose of this paper is to study how will the uncertainty of equity financing brought about by the equity financing regulations in emerging capital market affect company’s capital structure decisions.Design/methodology/approach-This paper establishes a theoretical model and tries to introduce equity financing uncertainty into the company’s capital structure decision-making.The paper uses mathematical derivation method to get some basic conclusions.Next,in order to characterize the quantitative impact of specific factor on capital structure,numerical solution methods are used.Findings-The model shows that firm’s value would decrease with the uncertainty of equity financing,because of the relationship between firm’s future cash and their financing policies.The numerical solution of the model suggests that the uncertainty of equity financing is one of the important factors affecting the choice of optimal capital structure,the greater the uncertainty is,the lower optimal capital structure is.Originality/value-The research of this paper has certain academic value for further understanding of the issues.