Research For The Investment Flexibility Of The Convertible-bond-issuer Based On The Real-option Theory

The main task of Chinese financing structure's regulating and optimizing is that the dynamic adjustment of the proportion between the direct financing and the indirect financing and the optimizing of the direct financing's inner structure, which is the process of the financing channels and facilities'multiplication and lamination. Convertible bond is a perfect financing facility for the financing side, which has the advantages including better financing capability, lighter outstanding achievement pressure, less financing cost, making for the capital structure's optimizing and the improvement of the management's level. While for the investors, convertible bond is not only a investing facility but a speculating one, which can make the risk of the principals'repayment under control, and gain income from several aspects. And the development of the convertible bond market is propitious to attract the institution investors. So, the development of convertible bond is the key and the breaking point of the financing structure's regulating and optimizing. It is very important to supervise the convertible- bond-issuing companies'financing and investment.On the base of the traditional research of the principal-agent problem, using option game theory, we study the contract prompting of the agency theory to solve the problem of agency cost existing in the companies effectively. This article provides a method of contract prompting, and works out an optimal contract including manager's wage, investment timing and yield, through which the shareholder can make the manage really pay out his effort with prompting contract and immateriality punishment. The contract can reduce the agency cost, make both the shareholder and manager double wins, and stimulate convertible bondholders to transfer the bond on time.By means of real option and computing analysis, we contract the research about convertible bond and the research about investment. Considering investment irreversible and financial constraint, we study the flexibility of the convertible-bond-issuer's investment and dividend. The existence of five strategy spaces has been testified, and the critical thresholds of the investment and dividend have been worked out. This paper analyzes the aspects to the investment and dividend from the capital, scale, fluctuation and so on, and finally solves the problem of the issuers'investment flexibility. This paper can not only provide academic instruction for the convertible-bond-issuers, but also act a very important role in the aspects of market competition's optimization and resource's distribution. Besides, this paper also provides another idea on convertible-bond-issuers'investment flexibility using option-game theory. Using the idea, the functions between investment or convertible timing and coupon interests and dividends could be worked out, while the fact that the issuing of convertible bond can accelerate the investment could be proved.