Study on Ownership Structure and Preference for Seasoned Equity Offerings of Listed Companies in China

Listed companies in China have a strong preference for SEO (seasoned equity offerings), which is contrary to Peking Order Theory which is appropriate for the mature capital market in Western countries. After reviewing the literature, we found academic circles think it right generally that the preference for SEO of listed companies is due to the low cost of SEO. This paper argues that China's listed companies' low SEO cost largely results from its "the largest stock-holder" of ownership structure. With the detailed analysis of the financing behavior under the control of the controlling shareholder, the paper comes to a conclusion that ownership structure of listed companies is the underlying reason for SEO preference. Finally, I give some advices for the governance on over SEO issues.