Research On Motivation And Implementation Effect Of Correcting Convertible Debt-equity Price Of Listed Companies

Convertible bonds are a financial instrument that investors can convert bonds of the issuing company into shares of the issuing company at an agreed conversion price,and listed companies can use convertible bonds for financing.in February 2017,the implementation rules for non-public issuance of shares by listed companies revised and released by the Securities and regulatory commission added restrictions on additional issuance of shares by listed companies,but it is clear that convertible bond financing is not restricted by the new rules.With the tightening of the policy on refinancing of additional shares,more and more listed companies are using convertible bond financing for refinancing,and the size of the convertible bond market has expanded dramatically.With the expansion of convertible bonds,listed companies often revise the conversion price of convertible bonds.The reasons why listed companies amend the conversion price of convertible bonds and the effect of the amendment on the conversion price of convertible bonds need to be studied.Dowstone Technologies,a GEM listed company,issued convertible bonds in December2017 and amended the convertible bond conversion price in December 2018,amending the convertible bond conversion price from $24.88 per share to $15.2 per share,amending the convertible bond conversion price by nearly 39%.The conversion price of convertible bonds was amended within one year of listing compared with other listed companies to amend the convertible price at an earlier point in time,and it has certain research value and significance as to what motivation Dowstone amended the convertible bond conversion price and what effects and shortcomings it had for the company after implementation.This thesis examines the case study of Dowstone Technologies’ amendment of convertible bond conversion price,examines the motivation of Dowstone Technologies’ amendment of convertible bond conversion price,and analyzes the implementation effect of Dowstone Technologies’ amendment of convertible bond conversion price in terms of both short-term effect and long-term effect.The conclusions of the study are as follows: the application of the amendment of convertible bond conversion price clause is influenced by the continuous weakness of stock market price;the amendment of convertible bond conversion price can increase the trading price of convertible bonds;the amendment of convertible bond conversion price can increase the convertible bond conversion ratio;the amendment of convertible bond conversion price can enhance the company’s anti-risk ability.The company also made three suggestions for listed companies to amend the convertible bond conversion price: firstly,the listed companies should amend the convertible bond conversion price earlier to reduce the possibility of convertible bond conversion failure;secondly,the project of convertible bond fund raising should be profitable;thirdly,if the convertible bond fund raising project does not have profitability,the conditional redemption clause should be triggered to increase the conversion ratio and enhance the financing capacity.At the same time,it is expected that the regulatory authorities can strengthen the supervision of the application of the terms of the listed companies to amend the conversion price of convertible bonds and the use of the funds raised,which can protect the rights and interests of small and medium shareholders.