Research On Announcement Effect And Influencing Factors Of Non Early Redemption Of Convertible Bonds

China’s convertible bond market was born in the 1990 s,and after more than 30 years of development,the domestic convertible bond market has now developed relatively mature.With the continuous expansion,a growing number of convertible bonds begin to meet conditional redemption terms.Although most domestic convertible bond issuing companies have a strong preference for equity financing,and will issue advisory announcements to force investors to conduct equity conversion operations when the redemption clause is triggered for the first time,there are still some convertible bond issuing companies that will not immediately exercise the redemption right when the redemption clause is triggered,but will choose not to redeem the convertible bond in advance.At the beginning of 2022,the domestic convertible bond market ushered in a wave of "no early redemption".This article will deeply explore whether the indicative announcement of non early redemption issued by an issuing company when it chooses not to redeem convertible bonds in advance will have an impact on the price of the underlying stock,and whether there is a public announcement effect in the indicative announcement of non early redemption.At the same time,based on the research on announcement effects,this article will further analyze which factors will affect the intensity of announcement effects.Finally,based on the conclusions of the study,I try to make corresponding suggestions for investors,regulators,and issuing companies.This article mainly draws on relevant literature and theories at home and abroad,using convertible bonds that meet conditional redemption terms but choose not to redeem early during the period from 2018 to 2022 as a research sample,and uses event research methods and multiple linear regression methods to study the announcement effect and factors affecting the intensity of the announcement effect on the sample.In the event study method section,this article divides the research sample into a total sample and two sub samples for research.The total sample is all convertible bonds that meet the redemption terms but choose not to redeem early during the period from 2018 to 2022.The sub samples are convertible bonds that meet the above conditions but belong to the Shanghai and Shenzhen Main Board,and convertible bonds that belong to the Growth Enterprise Board.The results obtained through the event study method show that the empirical results of the announcement effect in the total sample and the sub sample of GEM underlying stocks are both negative,but they do not pass the significance test;The empirical results using the underlying stocks on the Shanghai and Shenzhen main boards as sub samples show a negative effect,and have passed the significance test,indicating that the suggestive announcement of non early redemption of convertible bonds will have a significant negative effect on the underlying stocks on the Shanghai and Shenzhen main boards in the short term.Subsequently,an empirical analysis using multiple linear regression was conducted using convertible bonds on the Shanghai and Shenzhen mainboards,which are the issuing sectors of the underlying stocks,as research samples.The results showed that the parameters of the five independent variables,namely,asset liability ratio,growth rate of main business income,return on net assets,proportion of non-tradable shares in total equity,and the number of days between the date of redemption terms and the date of issuance of the non early redemption announcement,were 0.184,0.002,0.103,-0.031,and 0.014,respectively,The coefficients of three independent variables,namely,asset liability ratio,return on equity,and the proportion of non tradable shares to total equity,have all passed the significance test to varying degrees.The asset-liability ratio,the growth rate of main business income,the return on net assets,and the number of days between the date of meeting redemption terms and the date of issuance of the announcement of non early redemption can positively affect the announcement effect intensity of non early redemption of convertible bonds,while the proportion of non-tradable shares in total equity can negatively affect the announcement effect intensity of non early redemption of convertible bonds.