Study On China's Introduction Of Put Warrants Into Its Markets For Additional Stock Issues

Put warrants is a derivative security of the junior share, which is of put option nature. It is usually sold together with the bond (or the preference stock) in order to cut the financing cost of the company. Through the research of this dissertation, we can see that the introduction of put warrants can largely increase the efficiency of the markets for additional stock issues and reduce the cost of financing.Firstly, this dissertation analyses the current situation of the markets for additional stock issues in China, which are driven by the stockholders of non-circulation stocks. It does harm to the original stockholders, and therefore resisted by the investors; after the listed companies finish their financing, they become unconstraint. The idle of the raised fund and the change of investment become common phenomenon. Sometimes, the business performance"changed face"after the completion of additional stock issues. Analyzed by the help of model, we can see that the special stock-holding condition of China nowadays is the main reason for the company's financing"thirst and hunger"symptom, which also causes the transfer of benefit from the circulation stockholders to the non-circulation stockholders; during the process of additional stock issue, the circulation stockholders become the lame duck. And thus makes the additional stock issue market face a certain systematical risk. Therefore, the market for additional stock issues of China needs innovation.According to the above questions, I propose to introduce put warrants during the increase of stock issues. That is: the number of put warrants that issued during the process of additional stock issue should be larger than the additional stocks. After doing this, we can achieve five aims. They are: 1)a screening effect beforehand; 2)a compensation for the original shareholders; 3)form a constrained and incentive mechanism; 4)a reduction of financing costs; 5)the management of risk.In order to further understand the value of put warrants, this dissertation also analyses six factors that affect the value of put warrants. They are as follows: stock price, interest rate, dividend, the time that due, performing price and fluctuation rate.Additionally, this dissertation points out that as a derivative security of the junior...