The Order of External Financing of Enterprise Based on Financing Environment in China and Corporate Governance

Pecking Order Theory thinks that under the conditions of the perfect mechanism of financial markets the order of corporate finance is: internal financing, debt financing, issuing stocks. And the imperfection of financial markets determines that the financing order of enterprise in China is different from the Pecking Order Theory. Based on the specificity of internal and external environment of corporate finance in China, the paper obtains the conclusion that the order of external financing of enterprise in China is: equity financing, bank loans, and bond financing. With the further development of financial markets and the continuous improvement of corporate governance mechanisms, corporate financing will mainly take into account the factors of the market, the current distorted order of enterprise financing in China will be greatly changed.