Analysis of Convertible Bond from the Viewpoint of Control Rights: an Effective Financial Instrument to Managerial Incentive in Transition Economy of China
Different from traditional approach of cash-flow analysis, this paper discusses the problem of managerial incentive in transition economy condition from the perspective of control rights. High uncertainty confronted with transition economy and inefficiency of Chinese financial market decrease greatly the effect of equity-based incentive mechanism. Convertible bond, which possesses the dual properties of bond and stock, can bring both short-term pledgeable income and long-term value-creation incentive to managers. At the same time, its conversional property has a great advantage to mitigate the risk-taking of managers in transition economy of China. Our model shows that, well-designed convertible bond has an important role in realizing dynamic transferring of control rights in incomplete contract and controlling managerial opportunistic behavior in their investment decision.
Convertible bond Control rights Managerial incentive Transition Economy
Wan Difang Xu Xixiong Zhang Zhe Shi Yarong Zhao Jianfeng
School of Management, Xi’an Jiaotong University, Xi’an, Shaanxi, 710049
国际会议
昆明
英文
1-13
2005-07-05（万方平台首次上网日期，不代表论文的发表时间）