Donghua Software Convertible Bond Financing Analysis

With the maturity of the Chinese capital market,financing tools have become more diversified.Convertible bonds have the characteristics of stocks and debt,so they have attracted much attention in the market.This article selects the Donghua Software,a leading enterprise in information services.It analyzes in depth the reasons for choosing to issue convertible bonds,exploring the motivation and effectiveness of its choice of financing instruments,in order to find out the shortcomings of Donghua Software during the issuance of convertible bonds,it will provide useful experience for Chinese information service companies to select financing instruments.This paper combines theory and case analysis methods to study Donghua Software's issuance of convertible bond financing instruments.In theory,this article first gives an overview of corporate finance and introduces the main financing tools,common financing methods,and necessary factors that need to be considered when financing.Secondly,this article also mainly introduces the theory of convertible bond financing,describes in detail the meaning and characteristics of convertible bonds,issuance terms,advantages and disadvantages,incentives,and risk management of convertible bond financing,it provide theoretical basis for the company to choose convertible bond financing instruments.In the case analysis section,this paper uses methods such as comparative analysis,data graph analysis,and event research methods.It selects the case of Donghua Software's issuance of convertible bonds as a research object.After investigating the issuance scheme and process of this case,analyze the motives and post-issuance effects of the pre-issuance convertible bonds of Donghua Software.Based on the characteristics of Donghua Software,the main motivations of Donghua Software's issuance of convertible bonds include the guidance of external financing environment,the reduction of corporate financing costs,the reduction of corporate risks,and the reduction of information asymmetry.At the same time,the analysis of the research results shows that Donghua Software has improved the financial strength of the enterprise,the control power of the enterprise is still relatively stable,the market response is relatively positive,the overall risk level of the enterprise has declined,and the company's financing capacity and financing channels have been further expanded.In addition,the case of Donghua Convertible Bonds has the following deficiencies: financial pressure is still relatively large,inadequate evaluation of fund-raising projects results in poor fund use efficiency,mistakes in timing of financing opportunities,inadequate design of financing terms,and risk management of convertible bonds.Ability to be further improved.Finally,it is concluded that this case has the following implications: The company must choose a suitable financing tool in accordance with its own actual situation,must choose a favorable opportunity for enterprise financing,must provide sufficient and reliable argumentation for the financing and investment project,and must complete the design of financing terms.It is possible to improve and strengthen the risk management of financing activities,and provide useful experience for other companies in the information industry in China to choose convertible bond financing.