Research On The Purpose Of Exchangeable Bond Issuance:Reduction Or Arbitrage

With the continuous development of exchangeable bonds in China,more and more scholars have joined the research in related fields,and the research on the purpose of issuing exchangeable bonds by major shareholders has become a hot spot.In the existing literature,some scholars have formulated a set of exchangeable bond issuance clauses,supplemented by the perspective of issuers and listed companies,to judge the issuer's motives.However,the author has found that the method of judgment has certain limitations by reading a large number of documents.First of all,the judgment method only focuses on the timing of the issuance of exchangeable bonds,and does not track the changes before and after the issuance;In addition,the judgment method can only distinguish between the financing and the reduction of exchangeable bonds,and the author finds that the purpose of the reduction can be further subdivided.Based on the above reasons,the author uses the normative research method,the case study method and the event research method to conduct a deeper study on the purpose of the exchangeable bonds issuance by major shareholders.The author first reviews the literature from the perspectives of exchangeable bond issuance purposes,judgments of exchangeable bond issuance purposes and exchangeable bonds and capital operations.Then through the induction and sorting,the related theoretical knowledge of the basic theory,concept,characteristics,function and change of the issuance of exchangeable bonds is summarized.Next,this paper introduces the motivation judgment method based on the existing issue clause and supplemented by the issuer and listed company.By analyzing the advantages and disadvantages of existing judgment methods,the author proposes a new judgment method based on the combined capital operation of the listed company before the issuance of the exchangeable bonds by the major shareholder.The main advantages of this method compared with the existing methods are as follows:First,the judgment method can start from the capital operation of the listed company before the issuance of the exchangeable bonds,and trace to the end of issuance;second,the method can subdivide the purpose of reduced holding into two types:withdrawalt and arbitrage.The motivations for these two purposes are completely different.After that,the author selected two cases of Zhongchao Holdings and Zhongzhu Medical to verify the proposed judgment method.According to the case study,the purpose of the issuance of exchangeable bonds of Zhongchao Holdings is to reduce the withdraw,while Zhongzhu Medical is to reduce and arbitrage.In order to further study the impact of exchangeable bonds with different reduction targets on the listed company's stock price,the author used the event analysis method to study the stock price fluctuations of Zhongchao Holding and Zhongzhu Medical among ten transaction days before and after the first disclosure of the exchangeable bonds.Finally,the conclusions of this paper are drawn:(1)From the perspective of the capital operation of the listed company before the issuance of the exchangeable bonds by the major shareholder,the method ofjudging the issuance purpose of the major shareholder can be subdivided into the reduction to withdrawal and the reduction to arbitrage,the existing judgment method is supplemented and improved;(2)Through the event analysis method,the data analysis of the impact of exchangeable bonds with different reduction purposes on stock price fluctuations is carried out,and the result is that the Zhongzhu Medical Exchangeable Bonds with the purpose of reducing arbitrage for the purpose of issuance of the information,because of the previous capital operation portfolio,the market has confidence in it,bringing positive effects to shareholders;When the information exchanged for the purpose of the issue,China Super Holdings exchangeable bonds are generally not optimistic about the market,and bring negative effects to shareholders.The analysis shows that positive and optimistic capital operation can not only achieve arbitrage when issuing exchangeable bonds,but also may result in the stock price has risen.Compared with the previous research,there are two main innovations in this paper:(1)On the basis of the existing research,supplement and improve the method ofjudging the purpose of issuing exchangeable bonds.The proposed method can start from the capital operation of the listed company on the eve of issuance,to the end of the issuance of exchangeable bonds.The purpose of reduction is divided into two types:withdrawal and arbitrage.(2)This article first proposes the impact of different issue purpose on the stock price,and valid results obtained by the event analysis method verify the hypothesis.At the end of this article,three suggestions were put forward from the perspectives of investors,listed companies,and major shareholders and regulatory authorities of listed companies,hoping to provide some help to relevant personnel.