Author(s)

Maohua Li, Ping Zhong, Jiannan Zhang

Corresponding Author

Maohua Li

Abstract

The traditional financing theory assumes that the market is perfect, and the rational people try pursuing the maximal profit. But in fact, people will be influenced by all kinds of irrational factors. Therefore, this paper, from the perspective of the management irrationality, tries to find how a company makes a social responsibility financing decision, and how it uses market timing. This paper draws the following conclusions: 1. market timing exists in social responsibility financing. If the stock value is underestimated, the company will generally choose social responsibility financing, and if the stock value is overvalued, the company will choose other financing channels. If the market interest rate is relatively higher, the company will generally don’t select social responsibility financing. If the market interest rate is relatively lower, social responsibility financing will be chosen by a company frequently. 2. The manager, with more concern to risk aversion, will not select social responsibility financing.

Keywords

Financing decision; Social responsibility; Market timing; Risk aversion