Research On The Motivation And Timing Selection Of Controlling Shareholders To Reduce Their Holdings Of Convertible Bonds

Convertible bond is a kind of financial product with dual attributes of stock and bond,After more than a century of development,convertible bond financing has become an important financing method in the capital market.Compared with the international market,the development time of convertible bond in China is relatively short.Bao'an convertible bond issued by Shenzhen Airport in 1992 is the first convertible bond issued by Listed Companies in China.It was not until 2002 that convertible bonds began to develop formally.The CSRC enact ?The decision on Amending the measures for the administration of securities issuance and underwriting ?in 2017,the current capital purchase of convertible bonds has been changed into credit purchase,which has brought the convertible bonds into a high-speed development stage.Many enterprises have chosen to issue convertible bonds for corporate financing.According to statistics,China issued 11 convertible bonds,raising a total of 21.256 billion yuan in 2016;41 convertible bonds were issued in 2017,raising a total of 94.836 billion yuan;68 convertible bonds were issued in 2018,raising a total of 78.974 billion yuan.It can be seen that after the promulgation of the new regulations in 2017,convertible bonds ushered in a new round of development opportunities,showing a high-speed development trend.This paper selects Beijing Dongfang Yuhong Waterproof Technology Co.,Ltd.,the first convertible bond company issued after the credit application,as a case study.Dongfang Yuhong is a listed company with waterproof building materials as its main business.On September 25,2017,the company issued 1.84 billion yuan of convertible bonds for project construction in the form of "original shareholder's preferred allotment + public online subscription".According to the issuance results released by the company,the number of convertible bonds that the original shareholders preferred to place accounted for 85.50% of the total issuance.On October 20,2017,the convertible bonds of Yuhong were listed on the Shenzhen Stock Exchange,while on October 24 and October 30,the controlling shareholder Li Weiguo and his concerted actor Li Xingguo reduced their holdings of convertible bonds twice.Therefore,this paper analyzes the motivation of controlling shareholders' reducing convertible bonds and its impact on performance.The main research methods are literature research,case analysis,financial index analysis and EVA performance evaluation.In this paper,firstly,the relevant theoretical research of convertible bonds and large shareholders' reduction is summarized,which provides the theoretical basis for the following research;secondly,the concept,nature,advantages and disadvantages,issuance motivation and behavior of large shareholders' reduction of convertible bonds are summarized,and then the relevant theoretical basis is described;then the background,process and results of the company and the company's issuance of convertible bonds are described.Further analyzes the motivation of the controlling shareholders' reduction of convertible bonds,and draws the reasons for the reduction;then analyzes the timing of the reduction;finally,draws the conclusion of this paper,and puts forward relevant suggestions.The research of this paper shows that there are both positive and negative reasons for reducing the holding of convertible bonds by the controlling shareholders of Dongfang Yuhong,such as optimizing the ownership structure and reducing the risk of stock price fluctuation,as well as negative ones,such as the difficulties in capital and huge profits of the controlling shareholders.It can be seen from the analysis that the reduction of controlling shareholders occurs when the stock market of Dongfang Yuhong has a long-term upward trend and reaches the highest point of the stock price,and the reduction has a non-annual effect.In view of the timely choice of the reasons for the reduction,this paper puts forward relevant suggestions.Firstly,we should further improve the relevant laws and regulations,secondly,the securities regulatory authorities should strengthen the supervision of the reduction behavior,and finally,the public investors should rationally study the multiple reasons for the reduction of controlling shareholders.