The Research On The Effects Of Convertible Bonds On The Corporate Performance Of Chinese Listed Companies

Convertible bondss as a financial derivatives, originated in the United States i n nineteenth Century.Convertible bondss has the unique advantages in terms of fin ancing, as creditor’s rights, shareholdings, options and other properties, After one hundred years of development, Convertible bondss has become the unique charm of the financing and investment tools in the i nternational market.The convertible bonds market achieve more development oppo rtunities in the nineteen ninties, because the network to the burst of the bubble eco nomy in the global stock market turmoil, financial institutions and investors lookin g for other markets. In the recent20years, convertible bonds market has appeared unprecedented prosperity, mainly in product innovation, issue number and issuing scale unceasing expansion. The America convertible bondss offering the largest a mount of convertible bondss financing in international, accounted for more than ha If of total, followed by Europe and japan. The issuing amount of other Asian count ries convertible bondss is very considerable also, such as China and South korea. Our convertible bonds market starts from on century90time, but our convertible b onds market has not been able to develop until2001,The" listed companies convert ible corporate bondss" and some related measures for the implementation of file co mes on stage in succession after our convertible bonds market began to develop, At present, our convertible bonds market is still active, it will be for China’s enterp rises to create more financing opportunities in the future..Enterprises to take advantage of convertible bond financing can also reduce fi nancing costs and avoid the interests of the old shareholders from excessive dilutio n in a short time. Investors in the purchase of convertible bonds, also purchased th e rights of ordinary bonds which are not convertible in the future, and this will hav e been lower than the expense of ordinary creditor interest income, largely savings for the issuance of enterprise financing costs. Also, if the companies have chosen t o issuance of new shares at that time, although they achieve the purpose of financi ng, directly resulted in the expansion of the equity scale in a short time, and the dil ution of the existing share capital effects the existing shareholders. Their stock in s haring of the total equity reduced than issuing new shares. This is not conducive to driving the company’s rights.Coupled with the issue of new shares, the increase in the number of shares outstanding, earnings per share diluted, which give investors the illusion of earnings per share decreased due to the performance of the company, prices of the stock on the secondary market decline, and the company’s use of rai sing equity capital seriously shrinks. This is a huge loss for the company.Using of convertible bond financing can avoid this phenomenon. Before the transferred debt-equity swapping, the company’s ownership structure has not changed, and not cau se dilution to equity, which protects the interests of existing shareholders, and also avoid the potential risk to the stock price decline caused by the issue of new shares.Theoretically speaking, there are a great advantages by issue of convertible bonds for a business, but what is the actual situation, domestic and foreign experts and sc holars have conducted a series of empirical research.For example, Hansen and Cru tchley (1990) used the issue of ordinary shares, ordinary corporate bonds and conv ertible bonds of364companies from1952to1975as their sample, and finally fou nd under the three financing modes in a different way of financing long-term opera ting in four years the company emerged as the varying degrees of decline.Performa nce of the company fell from high to low as following, the company of equity fina ncing, the company issued convertible bonds and the issuance of bonds. And the d ata also showed that the financing volume and revenue decline into a positive corre lation; Lewis, of Seward (2003), used the United States issued convertible bonds o f566companies from1979to1990for data collection, analysis and assess the mai n business income of the performance, the rate of main business sales revenue, pro fit margin and total assets, capital expenditures and R&D expenditures. The result s show that the performance of the company has not improved after the issuance of convertible bonds, but fell.