Model analysis of equity financing problem for the enterprise under market competition

WANG Yu, YU Hui

Systems Engineering - Theory & Practice ›› 2018, Vol. 38 ›› Issue (1) : 67-78.

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Systems Engineering - Theory & Practice ›› 2018, Vol. 38 ›› Issue (1) : 67-78. DOI: 10.12011/1000-6788(2018)01-0067-12

Model analysis of equity financing problem for the enterprise under market competition

  • WANG Yu, YU Hui
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Abstract

Since equity financing has been an important part in boosting the rapid growth of enterprises, the competition in the product market takes tolls on enterprises' financing decision in the capital market. An equity financing model based on the perspective of market competition is constructed to analyze the effects of market competition on equity financing decision when one of the two retailers is in the process of exploiting a promising market. Core research indicates that the retailer with high growth, high valuation or strong product substitution must consider the "double effect" of market competition on financing, while the retailer with opposite features is seldom influenced by market competition. In addition, market competition restrains the retailer's equity financing and improves the proportion of its original shareholders and their profits, however reduce the development of high growth retailer.

Key words

equity financing / market competition / retailer / supply chain

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WANG Yu , YU Hui. Model analysis of equity financing problem for the enterprise under market competition. Systems Engineering - Theory & Practice, 2018, 38(1): 67-78 https://doi.org/10.12011/1000-6788(2018)01-0067-12

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Funding

National Natural Science Foundation of China (71571024);Humanities and Social Science Research Program Foundation of the Ministry of Education (15YJA630058, 14YJA630087)
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