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A Mathematical Model for Equity Financing Substitution Effects of Bio-pharmaceutical Listed Companies

Wu Xiaogang, Wang Pengyuan, Du Rongwei


Some health events happen frequently in China's biological medicine field in recent years, which are endangering public health and safety. Is it the venality or a deeper contradiction that triggered such illegal acts of the bio-pharmaceutical enterprises in disregard of the social morality? Based on the data of 64 Bio-pharmaceutical listed companies in China, this paper analyzes the enterprise equity financing substitution effect, and finds that the financing/debt ratio has risen from 24% in 2002 to 33% in 2011, suggesting that listed biomedical companies are financing and extorting his upstream, and the extorting is likely to lead to the liquidity shortage of the upstream enterprises. Under the drive of profit mentality, the upstream enterprises are more likely to show tendency to illegal business.


commercial credit, capital structure, bio-pharmaceutical, multiple regression.

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