Research On The Application Of Convertible Corporate Bonds In Corporate Finance

A Convertible Corporate Bond is a special corporate bond containing a provision that permits conversion to the issuer' s common stock on fixed terms in a particular period. It is part debt, part equity, contains characteristics of debt, equity and options. All these offer a Convertible Corporate Bond the possibility of selling common shares at a premium, and the attraction of low cost debt in the period before it is converted.In recent years, Convertible Corporate Bonds have grown at an accelerated pace in countries and areas such as America, Europe Union, Japan and Southeast Asia, and have become an important part in the financial market, plaied as a positive role in the financial market' s booming and corporation competitives' enhancing.Convertible Corporate Bonds have been certainly developed and used in our country, but it is now still, in comparison with developed countries, on the initial stage. The scale is small, varieties are poor, market system is still out of shape, some aspacts of bond' s device, valuation, operation, and laws correlated are still on the state of hysteresis or in blank. There are default in issuer and investor' s knowledge. Some important defects are now restricting the market to grow, improve and perfect. In addition, a convertible Corporate Bond is a hybrid security, it' s valuation and issuing is complex, investor will ask more information before their investment. Allthese carry much more risks to a Convertible Corporate Bond.It is very essential , the penman think , to ensure Convertible Corporate Bonds' sound development and making full use in our financial market, to learn the advanced theories and experiences of other countries , absorb the past good and bad experiences , consummate convertible bonds' normative operation, safeguard the investor' s benefit, enhance the exploration on theories and practical operation on convertible bonds' valuation and how to keep away risks related.The article, do as corporate financer, on the base of a theoretical analyze on a Convertible Corporate Bond' s economic features , issuing motive, leverage, risk arid management, has a research in-depth on convertible Corporate bonds' valuation, issuing choice of the right moment, issuing scale, designing of bond' s terms, publishing of information on dilution and effect on capital structure. After these, have a exploration on the Convertible Corporate Bond market' s constructing, improving and perfecting. At last, such theories and thoughts are used in the analyzing on the example of YangGuang.