Does the Convertible Bond Financing Reflect the Benefits of Control in China
Convertible bond (CB) as an important way of refinancing plays an important role in capital market In this paper, we provide a simple analytical framework, and consider benefits of control of existing large shareholders who can influence the companys financial decision-making. We find that CB with debt and option attribute impact on the benefits of control of large shareholders is a double-edged sword. The conversion option of CB has uncertainty, which causes the conversion rights in the investors hands cannot be controlled by large shareholders; that is, the company issuing CB eventually existing in the way of stock or bond can not be determined by large shareholders. If the potential constraints of debt attributes of CB turn into actual constraints of debt repayment, the company would be insolvent liquidation; large shareholders will be loss of control over. At the same time, multiple regression find that benefits of control do not materially affect CB financing of the listed companies; companies with a large scale assets and a low assets and liabilities of ratio prefer to use CB financing, but this paper does not find operational risks, growth and free cash flow index in conjunction with option attribute of CB of impacting CB financing of listed companies. This shows that Chinas listed companies using convertible financing can take into consideration more of debt attribute of CB, and less of option attribute of CB. This also shows that the potential constraints of debt attribute and the uncertainty of conversion options inhibit benefits of control from a certain extent China can moderate the development of CB financing to curb the more common benefits of control in capital market.
convertible bond (CB) benefits of control debt attribute option attribute
WANG Dongnian WEN Yaqing LIU Xuemei NIU Yuke
Tianjin University of Finance & Economics, P.R.China,Hebei University of Economics & Business, P.R.C Hebei University of Economics & Business, P.R.China Hebei State-Owned Assets Hold & Operation Co., LTD., P.R.China
国际会议
杭州
英文
128-132
2009-10-25（万方平台首次上网日期，不代表论文的发表时间）