Empirical Study Of The Performance Changing Tendency After Issuing Convertible Bonds In Listed Companies

As the national securities market keeping developing nowadays, more and more companies has subjected to issue convertible bond, because it is a kind of hybrids between debt and common equity. Convertible bond has the dual functions of the financing and risk avoiding. On the international financial market, convertible bond develops rapidly, and it has become the second largest bond only second to bonds issued. Convertible bond has a lot of advantages among the many means of financing methods; it has a positive effect on the company capital structure and corporate governance. Theoretically the issuance of convertible bond can improve the performance of listed companies, so that how the performance of companies will be after issuing the convertible bonds in China's capital market? Why is there such a situation? In light of these problems, the paper carries on a research from two aspects of theoretical and empirical.There are six components in this paper.The first part presents the research background of this research, as well as the development of China's current convertible bond market. Then, this part reviewed the relevant researches.The second part introduces convertible bond of definition, attribute, category and issue-oriented policies. This part also analyses the principle how the convertible bond can influent on corporate performance from three aspects which are transaction cost, corporate risk and manager's incentive.The third part and the fourth part compose the core part of this paper. The third part analyses 33 listed non-fiancial companies which issued convertbile bonds between 2000 and 2004 and their industry controls emprically. The result of emprical analysis shows that corporate risk is under control after convertible bond issued, but corporate performance dcline after that.The fourth part has made a multi-level analysis on the reason for the decline of the performance on the basic of the result of emprical analysis, then finds out the main reason for the decline is the exisitence of earining management before issuance of convertible bonds. There has another reason is that companies put the captial was invested in long-term projects leading to slow profit return. In addition, the decline can aslo be led because that share reform not thorough enough and the agency cost and asymmetric information phenomenon still exist between manager and investor.The fifth part proposes the corresponding solutions of promote the development of convertible bond market on the basic of result.The sixth part is the conclusion part. This part summarizes the result of theoretical and empirical analysis, and then proposes future research trend and the direction of the efforts of the author.