1, the difference between equity financing and debt financing is:

(1) Different risks;

(2) Different financing costs;

(3) The influence on control right is different. Although bond financing will increase the financial risk ability of enterprises, it will not reduce the control right of shareholders. If you choose equity financing, the existing shareholders' rights and interests will be diluted. Therefore, well-developed enterprises are generally reluctant to carry out equity financing.

(4) Different roles for enterprises. Equity financing is to obtain permanent capital for enterprises, which can better help enterprises resist risks.

Second, the advantages of equity financing

Equity financing has the following advantages in enterprise investment and operation:

(1) Equity financing needs to establish a relatively perfect corporate governance structure. The corporate governance structure of a company is generally composed of shareholders' meeting, board of directors, board of supervisors and senior managers, which form multiple risk constraints and rights balance mechanisms. It reduces the business risk of enterprises.

(2) In modern financial theory, the securities market, also known as the open market, refers to the trading of standardized financial products in a relatively wide range of institutionalized trading places under certain market access, information disclosure, fair bidding and market supervision systems. The corresponding loan market, also known as the agreement market, means that in this market, the financing activities of both borrowers and borrowers are directly agreed. In financial transactions, people pay more attention to the openness and availability of information. Therefore, the securities market is superior to the loan market in terms of information openness and capital price competitiveness.

(3) If the borrower occupies a large share in the ownership structure of the enterprise, the possibility of engaging in high-risk investment and moral hazard with enterprise loans will be greatly reduced. Because if you do this, the borrower will suffer huge losses, so the greater the net asset value of the borrower, the greater the motivation for the borrower to act according to the wishes and wishes of the lender, and the less likely the bank will default and lose its debts.

Equity financing and debt financing have their own advantages and disadvantages. For companies with financing needs, we should first judge what kind of financing mode they meet, and then judge which financing mode can bring more economic benefits to them according to the actual situation.