| Convertible bond is a kind of hybrid financial derivative instrument with embedded options such as redemption rights,conversion options,and the right to sell back.Because of the existence of these options,convertible bonds have the the characteristics of both credit and options.Convertible bonds have the advantages of flexible design of terms and low financing costs.They can also transform corporate debt financing into equity financing by promoting investors’ equity conversion,Therefore,convertible bonds are popular in the field of investment and financing.In recent years,convertible bonds have developed rapidly in China,and the scale of financing has been expanding day by day.It has become an important investment and financing tool in the field of investment and financing in China.The redemption clause is an important part of convertible bonds,so the study of convertible bond redemption is helpful for us to have a deep understanding of convertible bonds,and has important practical guiding significance for investors to make reasonable investment decisions and financing companies to choose a reasonable time for redemption.The main purpose of this paper is to explore the impact of convertible bond redemption on companies in China,including the short-term stock price effect of redemption and the medium and long-term performance effect of convertible bond redemption.Firstly,this paper tests the existence of the short-term stock price effect of convertible bonds in China by using the short-term event study method.The results show that there is a negative stock price effect before the announcement of convertible bonds redemption,and the effect will last until after the redemption announcement.Then we construct a multiple linear regression model to analyze the influencing factors of the redemption stock price effect.The study find that the redemption stock price effect is affected by growth of the company,the size of the company and basic characteristics of convertible bonds.Secondly,using principal component analysis and Wilcoxon signed-rank test to study the the long-term performance effect of redemption mainly analyze the changes of company performance after the redemption of convertible bonds by listed companies in China.The results show that the financial performance of the company in one year after the redemption of convertible bonds is significantly different from that in the year of redemption,and the company’s performance in one year after the redemption is higher than in the redemption year,which indicates that the redemption of convertible bonds can improve the company’s performance. |
