Notice of Retraction: Study on the reason of equity financing preference

Abstract

There was a clear preference of equity financing in China, which was contrary to pecking order theory in Western-developed markets. Why this phenomenon happens in China? This article studied from the perspective of soft restriction of equity financing cost. Because of soft restriction, makes the total cost of equity financing lower than debt financing costs, equity financing preference formatted. Even if there is equity financing cost higher than debt financing costs, because there were exist imperfect corporate governance and capital markets, lead to equity financing costs lack of binding for the enterprises financing decisions, will inevitably lead to equity financing preference. This article concludes with a number of recommendations.