Pressure of Competition to Listed Companies in Commodity Market and Selection of Financial Leverage

As revealed by some competition of commodities supplied foreign experts, the financial leverage has an impact on the market by different listed companies, and low financial leverage implies a competitive edge but high financial leverage is liable to fail in business operation. Viewing from such an angle, the low financial leverage is in fact a conservative financial behavior, which means a reasonable selection. Generally, Chinese listed companies prefer financing from offering equity shares, which is regarded as a reasonable selection weighing both gains and risks. However, based on an analysis of the pressure of market competition to the listed companies of various industries and how they select their own fit/ancial leverage, it is found that there is an extremely unmatched phenomenon in China＇s capital market, i.e., the keener the commodity market competition is, the higher the financial leverage of listed companies will be. Therefore, the over-financing from offering equity shares is coexisting with under-financing from offering equity shares in China＇s capital market at present, and both lead listed companies to low efficiency.

Pressure of Competition to Listed Companies in Commodity Market and Selection of Financial Leverage