Research On The Motivation And Performance Of Guangzhou Automobile Group’s Issuing Convertible Bonds

Financing is very important to the development of a company.There are two types of financing: stock finance and debt finance.Differ from other financial tools,Convertible bonds have two sides: bonds and stocks.While holding this kind of bonds,investors have rights to change those convertible bonds into the share of the company.By setting the issuance conditions,it is possible that convertible bonds will have the advantage of both debt and equity.The use of convertible bonds for financing is becoming one of the main financing methods for businesses.Today,the size of our country’s convertible bond market is growing.It is very important to study the financial decisions of companies,innovation of financial products,and the use of convertible bond loans for the development of our country’s capital markets.When the existing research data on convertible bonds are summarized and summarized,it becomes obvious for us to conclude that from now on,researchers have mainly focused on convertible bonds’ setting,issue price and how these factors affect the company’s value.The financial impact after issuance of bonds is relatively poor.In this paper,we use GAC convertible bonds issued by GAC Group in 2016 to look at the company’s market and financial performance.After all 6 chapters study,i fund that after GAC issue their convertible bonds,the reflect of the capital market was positive.GAC Group’s cumulative excess return over the selected period was positive and uptrend.It analyzes changes in the company’s financial performance vertically and horizontally through the entropy method and financial index method.After using those above two way,it comes to the conclusion that due to their convertible bonds,their company’s financial performance was better before the issuing.What’s more,the Economic value added of GAC from 2014 to 2019 also showing the group’s value had been added because of their convertible bonds.It was finally confirmed that in 2017,GAC Group’s EVA increased significantly compared to 2016.This growth confirms that the company’s financial performance has improved since GAC’s issuance of convertible bonds.This document describes the motivations and successes of the GAC group in six chapters.The introduction is the first part of this paper.Among this part,I explain the reason why I choose this subject and the meaning of the case studying.Besides,under what background I decide to write a paper of the GAC group.The structure of this paper is in this part as well.Then it comes to the 2nd part,the main content of this chapter is some theory related to convertible bonds and before my paper was done,other scholars’ study about this bond.It’s mainly features,advantages and disadvantages,and other related concepts of convertible bonds.The first part of chapter 3 is automotive company and Chinese domestic company’s financing situation.The rest part of this chapter includes the settings and use of GAC’s convertible bonds and the company’s operating and financial condition.Chapter 4 looks at the motivations for the GAC Group to issue convertible bonds for funding.Chapter 5 Event Analysis As an analysis of the performance of convertible bonds for automobiles in Guangzhou,changes in market performance and the financial performance of companies after the issuance of convertible bonds by the entropy method are examined,and financial indicators are compared and analyzed.The conclusion and explanation of the study is drawn in the last chapter of this article.