Study On Financing Preference And Economic Consequences Of Perpetual Debt Issuers

Perpetual debt is a mixed capital tool with both debt and equity,and it is attracting more and more attention from domestic companies and investors as a widely used financing instrument for overseas mature capital markets.In October 2013,Wuhan Metro Group Corporation announced the issue of "13Wuhan Metro Group Corporation Perpetual bonds",which does not have the deadline,but to give the issuer the option every five years.After this time,this bond innovation has been supported by the regulators,and showing a rapid growth trend.the issuance of perpetual debt in China is widely distributed,whatever in the nature of enterprises or from the industry.However,due to the characteristics like long debt maturity,high interest rates,Additional issuer foreclosure and sensitive to the risk of interest rate.The perpetual debt is not suitable for all enterprises,for example,Because of the more sensitive to the cost of financing,small and medium private enterprises is difficult to issue the perpetual debt.If company issued a perpetual debt with no combination of the actual situation,it will cause irreparable business risks and financial risks.In this paper,we try to study the financing preference and economic consequences of the perpetual debt issuance companies by using the two-dimensional analysis framework of "company characteristic-issuance announcement stock price effect".This paper summarizes and introduces the basic development of China's perpetual debt and related financing theory,using the method of normative analysis combine with theoretical analysis to research the financing preference of corporate bonds,In order to research the operating capacity,solvency capacity,agency costs,development capacity,profitability and ownership structure of the issuer,This paper constructs a Logistic judgment model,and the result is that companies with less solvency,high cost of agency tend to issue perpetual debt,In terms of the economic consequences of the issuance of the perpetual debt,the stock price effect and its influencing factors of the issuance of perpetual debt are empirically analyzed based on the market model of event research method,we found that the issuance of perpetual debt will produce a significant negative effect on the stock price,Through the cross-sectional regression analysis,it is found that the stock price reaction in the event period is related to the income and distribution scale of the main business.At last,the paper summarizes the whole paper and puts forward some suggestions from some angles.