Warrants Financing Research, Its Application In China

Listed companies have being facing challenges from market. The majority of state-owned enterprises' unsuccessful reform leads to the improper equity structure and the absence of incentive and restrictive mechanism, this exacerbates the unrestrictive refinancing of this kind, decrease the efficiency of resource allocation. Under such background, this paper starts with the aim of finding a method to promote their competitiveness-oriented financing.Referring to the fruits of option researches and analyzing systematically the dual functions as both financing promotion and incentive compatibility, this paper figures out, better than stock quota, stock supplement and convertible bonds, warrant can shoulder the mission of restrict the refinancing of listed companies. Its work mechanism can be illustrated in this way: upbuild a restrictive mechanism from exterior, which can give the voting right to warrant holders, that is to say, the investors have the right to decide whether or not buy the issuing companies' stocks according to their operational results and stock price; and establish an incentive mechanism internally and form the positive correlativity of corporate' performance with the salary of senior executives in a bid to ensure the efficiency of financing decision and the use of the capital raised. Meanwhile, this paper presents a probe on the condition of warrant introduction, the risk regulation of warrant and its status in law, and brings forward some try-out methods.