Based On The Terms Of The Design Of The Convertible Bond Financing Empirical Research, The Impact On Stock Prices

Nowadays, as a new refinancing tool in our capital market, convertible bond financing is more and more welcomed by Chinese listed companies. In 2004, within the three main refinancing means, the scale of convertible bond financing is larger than seasoned equity offering and rights offering, the amount of convertible bonds financing account for half of the total refinancing amount. Our convertible bond markets also get a significant development. Convertible bond have both the equity and debt nature, is between the equity and common corporate debt, we know that the stock price in secondary market often falls with seasoned equity offering, how is the convertible bond financing? How much is stock price fluctuating resulted from convertible bond financing? And which factors influenced the stock price?By using the methods of theoretical analysis and empirical analysis, at first we review the foreign and domestic documents on the topic of the effects of convertible bonds issuing. In the empirical research, we use all the listed companies which have announced convertible bonds issuing from 2001 to 2005 as our research samples. We select four key events in the process of convertible bonds financing: the day of directorate passing the convertible bond offering advice, the day of announcing convertible bond prospectus, the day of convertible bond listing, the day of convertible bond coming into conversion period, on these four events we analyze the stock price fluctuation around the events using the standard event study method. Then, in order to make clear which factors affect the stock fluctuation, we build up two regression models both for the event of directorate passing the offering advice and the announcement of prospectus. In these regression models, on the basis of foreign research and also considering the practical conditions of Chinese market, we bring forward the model containing both the corporate information and the convertible bond term design as independents, the abnormal returns surrounding the key event as the dependent, we analyzed the factors affecting the stock fluctuation because of the convertible bond financing. It derived the conclusion that the event of directorate passing the offering advice and convertible bond coming into conversion period have a significant negative effect to stock price. The conclusion also shows that around the event of the directorate passing the offering advice, the debt ratio, Tobin Q ratio and whether or not the convertible issuing together with other important information disclosure are significant positively related to stock fluctuation;around the announcement of prospectus, the relatively issuing scale is significant negativelyratio, net profit rate and probability of redemption is significant positively related to stock fluctuation, the dilution rate of circulation stock and total stock issue also have negative contribution to the stock fluctuation. At last, we review the research conclusion of this paper and give some suggestions about the convertible bond term design, such as the coupon rate, the conversion premium, the adjustment of conversion price, the call provisions and the put provisions.