Research On The Issuance And Conversion Of Convertible Bonds Of Listed Companies In China

The issue of refinancing choices of listed companies has been receiving much attention.Long-term empirical evidence shows that there is a clear equity financing preference for listed companies in the A-share market.Since the issuance of the new refinancing policy and the new rules on reducing holdings in 2017,equity financing has been limited,and the targeted issuance market has been depressed.At the same time,due to the characteristics of both debt financing and equity financing,the issuance of convertible bonds has rapidly expanded and has become a mainstream refinancing tool.In this context,this paper decided to focus on the issuance and conversion of convertible bonds,analyze the behavior mode of issuers and holders in the convertible bond financing market,investigate its financing motivation,provide a relatively complete empirical evidence for the study of convertible bond financing,and also provide a new reference for the formulation of refinancing policies.This article's research on the issuance of convertible bonds mainly examines the circumstances under which listed companies tend to choose to issue convertible bonds for refinancing,that is,the issue of refinancing preferences of listed companies.In the past,domestic scholars' research on this issue often used company characteristics as explanatory variables,or failed to deal with endogenous problems well when they combined the company characteristics with the overall economic factors.While this article focuses on the situation where equity financing is limited,the financing constraint index is used as the main explanatory variable and the company-level characteristic indicators and macro-economic-level interest rate indicators are used as covariate candidate set in logit model.It is found that when equity financing is limited,listed companies will prefer convertible debt financing.And the three proxy indicators used in this paper to characterize the degree of equity financing constraints,cash-cash flow indicators,SA indicators and Tobin Q indicators all support this conclusion.Further,this article considers financing constraints(company characteristics)and interest rates(economic factors)together,analyzes how the tendency of companies with different organizational forms(private enterprises vs.state-owned enterprises)in convertible debt financing is affected by the two.Using PSM method to alleviate the bias caused by self-selection,it is found that when the medium and long-term loan interest rates and financing constraints faced by listed companies are at a high level,private enterprises have stronger convertible debt financing preferences than state-owned enterprises.And the difference in convertible bond financing propensity between the two will further expand with the increase of interest rates and financing constraints.As for the research on the behavior of conversion of convertible bonds,the existing related research in China mainly focuses on the factors that influence irrational conversion and the subsequent effects of the conversion.In this paper,innovative attempts are made in the research content and research methods.Based on all the samples of unforced convertible bonds that have expired,the method of matching + double difference is adopted to study the correlation between the convertible bond holders' conversion behavior and the abnormal rate of return of the underlying shares of convertible bonds.The results of the double difference(DID)show that the interval in which the proportion of non-converted shares rapidly decreases corresponds to a significantly higher abnormal stock return rate,which is based on a highly matched sample of the processing group and the control group.Covariates for matching include the characteristics of the issuing company and the company's operating conditions(including indicators of profitability,growth ability,debt structure,equity structure,cash position,industry,etc.),the characteristics of the economic environment(interest rate level)faced when issuance announced,and the characteristics of the convertible bond itself(including the credit ratings of issuance,maturity,total amount raised,interest rates need to pay,etc.),so the abnormal rate of return of the underlying stock obtained here cannot be explained by the factors above.Therefore,it is considered that the listed company is suspected of implementing market value management.Plus it is related to the intensive conversion behavior,it is defined as market value management for the purpose of promoting conversion in this paper.Further,it is also found that for a convertible bond sample that still has a significant proportion of shares that are not yet converted before the deadline for conversion,after the end of the conversion period,the stock price of the issuing company will fall in the short term.Similarly,as other factors are eliminated in the matching process,it is considered as the reversal effect of the market value management.