Convertible Bond Financing And Regulatory Research

A convertible bond is a bond that gives the holder the right to convert the bond to common shares of the issuer at a fixed ratio during a stated period. As a bond, it has some characteristics of fixed income securities, while its conversion feature is of the feature of equity. Compared with other financing ways, convertible bond has the low costs, can alleviate business indicator's dilute speed, and optimize the structure of capital. In the present stage, developing convertible bond can increase listed company's financing means on microcosm, and is favorable to the stability and development of the capital market of our country on macrocosm.The theory analysis of convertible bond pricing sets up on the basis of pricing theory of option of Black-Scholes (1973 ), and adopts two factor models that Ho and Preffer (1996 ) put forward. The introduction of the default risk is based on Tsiveriotis and Fernandes (1998 ), and adopts the reduced-form of the default risk. The article has carried on systematic analysis to the announcement effect of the convertible bond, use AR and CAR to analyse the response of the basic stock price to the issue of convertible bond, and provides the rational explanation. The article also carries on the extensive world market comparison, and advocates the practicality and initiative of the supervision department, puts forward the policy recommendations to supervision department. It is exactly a supervisory system of convertible bond that this text puts forward too.Six parts are included in this paper altogether. Part 1 introduces background and meaning of studying, main research approach and the characteristics of this paper. Part 2 compares three kinds of financing means, and analyses the advantage and disadvantage of convertible bond. Part 3 carries on theory analysis to the price of convertible bond. It includes document survey, derivation of the theory model and deep research. Part 4 focuses on empirical study of the convertible bond announcement effect using the event research approach. Part 5 compares American and Chinese market, structure the convertible bond market system of our country.Part 6 studies the supervision of the convertible bond, and propose the supervisory system: strengthens the disclosure of information, perfects the law insufficiently and educate the investors.