ABSTRACT
In addition, from the perspective of foreign capital structure theory, the view of “First of debt financing, then equity financing” is generally considered the correct. And foreign corporate finance practice has basically validated the conclusion. Seeing from listed electric enterprises refinancing situation, they have chosen one or two of the equity financing. The listed electric enterprises are best in the industry. They should be able to better
1 INTRODUCTION
Capital structure refers to the sources, combination and their relationship by which enterprises obtain long-term funding. Enterprises’ capital structures have relations with investment returns, financing costs, debt ratio and other factors. Business capital formation mainly comes from equity financing and debt financing. The study on capital structure in domestic mainly focuses on the relationship between ROE and capital structure. The leverage effect of debt financing has been extensively studied, that is, how to achieve optimal capital structure of enterprises. The so-called optimal capital structure is adequate balance in the financing costs and financial risk situation, to enable businesses to maximize the value of the capital structure. Optimal capital structure of enterprises reflects the increase in revenue, but also with companies related to risk tolerance. Debt financing will bring benefits, but also risks and the risks are primarily reflected in the interest rate risk, liquidity payments risk, and liquidity risk. The way of refinancing fully shows enterprise decisionmakers’ tolerance for risk. Listed company’s capital structure optimization has been studied in this paper from the perspective of risk and utility.
