The Empirical Study On The Influence Of Managerial Ability And Managerial Entrenchment Level On The Convertible Bond Financing Of Listed Companies

Chinese Listed Corporations issued the first convertible bond in 1992, the convertible bonds develops rapidly during the following twenty years. The appearance of convertible bonds provides a new external financing way for listed companies in China. Against this background, it’s necessary to explore the influencing factors of listed companies’convertible bond financing. The orginal finance plan of the listed companies is put forwarded by the management layer and then is submitted to the board of directors for consideration. The management layer itself has a strong impact on the selection of external finance plan. The Human Capital theory thinks human capital has height heterogeneity, then how the difference of managerial ability affects the convertible bond financing? What influence has the difference of managerial ability had on the issuing of convertible bond and scale of convertible bond? The foreign scholar formulated the Convertible bonds’financing under Managerial Entrenchment hypothesis by building the model. The hypothesis thinks managerial entrenchment influences the company’s convertible bond financing, then how the difference of managerial entrenchment level affects the convertible bond financing? What influence has the difference of managerial entrenchment level had on the issuing of convertible bond and scale of convertible bond? As stated above, the artible researches the influence of managerial ability and managerial entrenchment level on the convertible bond financing in the management perspective. Based on this, the article researches how the interaction of managerial ability and managerial entrenchment level affects the convertible bond financing.Firstly, the article researches the influence of managerial ability and managerial entrenchment level on the issuing of convertible bond. After building binary logistic regression mode and using SPSS 17.0 to analyze the data, the result shows, the stronger the managerial ability is, the more the listed companies is willing to issue convertible bond; the higher the managerial entrenchment level is, the more the listed companies is willing to issue convertille bond; managenal ability can strengthen the influence of managerial entrenchment level on the issuing of convertible bond. Secondly, the article researches the influence of managerial ability and managerial entrenchment level on the scale of convertible bond. After building multivariate linear regression mode and using SPSS 17.0 to analyze the data, the result shows, the stronger the managerial ability is, the larger the scale of the convertible bond is; the higher the managerial entrenchment level is, the larger the scale of the convertible bond is; managerial ability can strengthen the influence of managerial entrenchment level on the scale of convertible bond. Thirdly, the article does robustness tests for the empirical results and no significant changes are found. At last, the article provides advice for listed companies and investors on the basis of the researches.