The Research On Correlativity Between Announcement Effect Of Convertible Bonds And Financial Characteristic

The fast economical development has brought financial product changing with each new day, the channel of raising fund also from the sole to multiplication. But due to especial institutional background in Chinese security market, the stock market has been seriously distorted compared with the developed country mature market. Our supervising department enhanced the threshold of secondary offerings through promulgating some rules of law. Now, more and more listed companies choose the convertible bond as one of the important channel of raising fund of the company. Whether the announcement effect of convertible bonds issued can be similar to stock, whether it released negative influence to the stock market? This article is to study the announcement effects of convertible bonds, also proposes some suggestion about building up securities business in our country.In order to understand the announcement effect of convertible bonds, this text regards its impact on company's value as the starting point of study including 30 event companies with convertible bonds listed on China Stock during the 2001-2004 periods. Moreover we choose the financial characteristic of the issued firms as study variable, and grouped these firms basing on the financial ratio size.The conclusion can be arrived as followed: the announcement effect of convertible bonds had the negative unusual reward at the event day, but did not have the obvious information effect; around 41 days' announcement event period, appeared remarkably unusual reward in 5 days, without any negative remarkably unusual reward, which explained the investor holding the positive view to the announcement of convertible bond; elongating the event window and discover the accumulation unusual reward performance also reaching the remarkable level. Moreover, according to the financial characteristic classification, we find that companies with higher Debt Ratio , larger Earnings Per Share, higher Business Income Growth Ratio and Total Assets would be associated with better announcement effects.