【正文】 October, 2020 Abstract ： This article concentrates on the listed panies’ financing activities in China, analyses the reasons that why the listed panies prefer to equity fund from the aspect of nonsystematic factors by using western financing theories, such as financing cost, types and qualities of the enterprises’ assets, profitability, industry factors, shareholding structure factors, level of financial management and society culture, and concludes that the preference to equity fund is a reasonable choice to the listed panies according to Chinese financing environment. At last, there are some concise suggestions be given to rectify the panies’ preference to equity fund. Keywords: Equity fund, Nonsystematic factors, Financial cost 1. Introduction The listed panies in China prefer to equity fund, According to the statistic data showed in China Securities Journal, the amount of the listed panies finance in capital market account to billions in 1997, among which equity fund take the proportion of %, and the proportion is % in 1998 and % in 1999, on the other hand, the proportion of debt fund to total fund is respective %, % and % in those three years. The proportion of equity fund to total fund is lower in the developed capital market than that in China. Take US for example, when American enterprises need to fund in the capital market, they prefer to debt fund than equity fund. The statistic data shows that, from 1970 to 1985, the American enterprises’ debt fund financed occupied the % proportion of outside financing, more than equity fund. Yan Dawu etc. found that, approximately 3/4 of the listed panies preferred to equity fund in China. Many researchers agree upon that the listed panies’ outside financing following this order: first one is equity fund, second one is convertible bond, third one is shortterm liabilities, last one is longterm liabilities. Many researchers usually analyze our national listed panies’ preference to equity fund with the systematic factors arising in the reform of our national economy. They thought that it just because of those systematic facts that made the listed panies’ financial activities betray to western classical financing theory. For example, the “picking order” theory claims that when enterprise need fund, they should turn to inside fund (depreciation and retained earnings) first, and then debt fund, and the last choice is equity fund. In this article, the author thinks that it is because of the specific financial environment that activates the enterprises’ such preference, and try to interpret the reasons of that preference to equity fund by bination of nonsystematic factors and western financial theories. 6 2. Financingl cost of the listed pany and preference to equity fund According to western financing theories, capital cost of equity fund is more than capital cost of debt fund, thus the enterprise should choose debt fund first, then is the turn to equity fund when it fund outside. We should understand that this conception of “capital cost” is taken into account by investors, it is somewhat opportunity cost of the investors, can also be called expected returns. It contains of riskfree rate of returns and risk rate of returns arising from the investors’ risk investment. It is different with financing cost in essence. Financing cost is the cost arising from enterprises’ financing activities and using fund, we can call it fund cost. If capital market is efficient, capital cost should equal to fund cost, that is to say, what investors gain in capital market should equal to what fund raisers pay, or the transfer of fund is inevitable. But in an inefficient capital market, the price of stock will be different from its value because of investors’ action of speculat