%A ZHENG Zuxuan, ZHOU Ye, LI Da, ZHAO Tao %T Non-circulating equity and excessive equity fi nancing %0 Journal Article %D 2007 %J Front. Bus. Res. China %J Frontiers of Business Research in China %@ 1673-7326 %R 10.1007/s11782-007-0025-9 %P 422-436 %V 1 %N 3 %U {https://journal.hep.com.cn/fbr/EN/10.1007/s11782-007-0025-9 %8 2007-09-05 %X In the Chinese stock market, the price of exchangeable stock is determined by the discounted future uncertain cash flow, while the price of non-circulating stock depends on per book value. In general, because investors holding non-circulating equity maintain the control power, corporate finance and investment decisions reflect their interests. The pricing mechanism of non-circulating stock violates the basic pricing principle of the capital market. Therefore, corporate finance decisions deviate from the NPV (net present value). As a result, excessive equity financing problems would occur in the listed companies.