Abstract:

There is a pretty high institutional cost of financing in Chinese stock market now, for many companies waste a lot of social capital in excessively financing. Distorted information results in improper allocation of social resource and the motivations of business management of many companies are weak. It is necessary to reduce and to control the institutional cost, in order to increase the institutional revenue of the stock market. Therefore, to modify the improper guidelines and ideas and to regulate the behaviors are of great significance in the stock market.

Key words: stock market, institutional cost, excessively financing, capital reconstruction