Research On The Motivation And Implementation Effect Of Issuing Convertible Bonds After Share Repurchase Of Listed Companies

With the gradual deepening of China’s economic system reform,China’s capital market is also gradually prosperous,but there are also some uncoordinated,unbalanced and imperfect structural problems.A typical example is “heavy stocks and light debt”.The operation of the cooperation model of “stock repurchase + bond conversion” will help regulators resort the concept of the integration of stocks and bonds,realize the parallel development of stocks and bonds,and give full play to a variety of financing functions,thereby promoting the benign development of China’s capital market.In response to the higher the pledge ratio of an enterprise’s controlling equity and the requirement for the combination of equity and debt,the 2018 Company Law added the provision that “the repurchased shares are used to convert convertible bonds”,known as the new repurchase rules.It is foreseeable that the rapid development of equity and debt integration has also led to the implementation of a large number of new refinancing regulations.Although this move is a reform of the buyback and refinancing system,the accompanying phenomenon of market manipulation has also put some pressure on supervision.As one of the first enterprises to convert shares repurchased into convertible bonds after the promulgation of the new regulations,the motivation and performance of Zhongtian Technology is an issue worthy of our attention.This paper uses literature research,event research and comparative analysis to study the refinancing motivation of Zhongtian Technology after stock repurchase and its mechanism on corporate performance.Firstly,from the perspectives of share repurchase,convertible bond issuance,and refinancing after share repurchase,the relevant research is systematically sorted out,and the relevant research content is analyzed in depth.Secondly,combined with the new regulations on share repurchase and the new regulations on refinancing,the conversion process of Zhongtian Technology’s share repurchase and convertible bonds is analyzed taking Zhongtian Technology as an example.Then,the motivation of repurchase was deeply explored: policy support,market value management,financing demand,capital structure,and in-depth analysis of the market reaction and company performance of refinancing after Zhongtian Technology’s equity repurchase.Finally,in view of the results of the case analysis and the actual situation of China’s private enterprises,some suggestions are put forward in several aspects that should be paid attention to in actual operation,such as: prudently formulating the repurchase plan,optimizing the option terms of the convertible bond,and choosing the time for the forced redemption of the convertible bond.