Financing Of Convertible Bonds Risk-based Utility Perspective

As the issuing scale expands unceasingly, convertible bonds in Chinese market is increasingly valued by the investors, but our country has a convertible bond issue clauses design are ubiquitous, yield sare low, the distribution firm basically to equity for the purpose, to achieve indirect equity financing. In current China convertible bond market investment varieties, structure similarity, unable to effectively share the risk investment, which restricted the development of convertible bond.At present domestic research on convertible bonds mainly focus on the pricing of convertible bonds and convertible bonds effect on the slock price of the company’s empirical analysis etc. From, the micro level consideration of convertible bond is very rare. The utility point of distribution firm and investors to consider, that investing inconvertible bonds can reduce the investment risk, improve the utility. And come to the following views and suggestions:1. The high risk, small-scale firms are more likely to issue convertible bonds;2.The single issue amount of the convertible bonds is larger than the common bond and stock financing, because the higher the amount of investment is, the stronger the risk is;3. The investment of convertible bonds, influenced by investor sentiment, will reduce the convertible bond investment when investor risk appetite increases, when the investor preference risk aversion increases on convertible bond investment;4. Distribution firm should be integrated into the market all kinds of investment risk preference levels, a reasonable set of terms of issue of convertible bonds, give full play to reduce investment risk, rather than simply to swap for the purpose of.The innovation of this paper lies in:1. For the first time in the risk utility function is the foundation of convertible bond financing is studied from the micro level;2. Some new suggestions on Clause design in our country are put forward on the issue of convertible bonds.