Generally speaking, the cost of equity financing is higher than that of debt financing, but in practice, affected by the purpose of investment and financing, corporate control and various uncertain factors, it cannot be said which financing method is more expensive.

Theoretically, the cost of equity financing is higher:

1. Real equity financing (except "clearing the shares and paying off the debts") often takes a long time. Investors pay more attention to the growth and long-term benefits of enterprises, and often sign gambling agreements, so the time cost is higher than the creditor's rights;

2. From the tax point of view: investors' returns: dividends are paid from after-tax profits, and there is no tax deduction, while the interest expenses of creditor's rights funds are paid before tax, which can generally be deducted. Of course, as equity financing, dividends should be determined according to the company's operating conditions, and the company does not have to pay dividends. Debt financing means that no matter how the company operates, it must repay the principal and interest as agreed.

3. The methods and procedures of equity financing are more complicated than debt financing, depending on whether equity transfer or capital increase is used. Under different circumstances, tax and financial costs are different.