Advantages: 1 A stable capital base; 2. Good reputation foundation of the enterprise; 3. The financial risk is smaller. Disadvantages: 1 Heavy capital cost burden; 2. The change of control rights affects the long-term stable development of enterprises; 3. The cost of information communication and disclosure is very high.

Equity financing refers to raising funds by issuing stocks, which is a very important means of raising funds in the economic operation of enterprises. As a kind of rights certificate, stock represents the shareholders' right to claim the net assets of the enterprise. On the other hand, ordinary shareholders have the right to exercise corresponding rights, control or participate in the production, operation, management and decision-making of enterprises by virtue of the shares they own and the total amount of shares authorized to exercise power.

1. Equity financing is the stable capital base of enterprises.

Equity capital has no fixed maturity and does not need to be repaid. It is the permanent capital of an enterprise and can only be repaid when the enterprise is liquidated. This is of great significance to ensure the minimum capital demand and promote the long-term sustainable and stable operation of enterprises.

2. Equity financing is a good credit foundation for enterprises.

Equity capital, as the most basic capital of an enterprise, represents the capital strength of the company and is the credibility foundation for enterprises and other units to organize operations and conduct business activities. At the same time, equity capital is also the basis of other financing methods, especially debt financing, including bank loans and issuing corporate bonds.

3. The financial risk of the enterprise is small.

There is no need to repay equity capital during the normal operation of the enterprise, and there is no financial risk of repaying principal and interest. Compared with debt capital, equity capital has fewer restrictions on financing and no special restrictions on the use of funds. In addition, enterprises can decide how much to pay investors according to their own operating conditions and performance, and the burden of capital cost is more flexible.

1. The burden of capital cost is heavy.

Although the burden of capital cost of equity capital is flexible, generally speaking, the cost of capital in equity finance is higher than that of debt financing. This is mainly due to the high risk of investors investing in equity, especially stocks, and investors or shareholders demand higher returns accordingly. Enterprises can't distribute profits and dividends for a long time, which will affect their market value.

2. It is easy to disperse the control rights of enterprises.

The adoption of equity financing, due to the introduction of new investors or the sale of new shares, will inevitably lead to changes in the structure of corporate control rights and disperse corporate control rights. Frequent changes in control rights will inevitably affect the personnel changes and decision-making efficiency of enterprise management and the normal operation of enterprises.

3. The cost of information communication and disclosure is very high.

As the owner of an enterprise, investors or shareholders have the right to know the business, financial status and operating results of the enterprise.