Research On Relationship Between Convertible Bonds Conversion And Stock Market Price Of Listed Companies

Due to the advantages of low cost of issuance,low issuance threshold and option characteristics,more and more companies have been financing through the issuance of convertible bonds in recent years,and the scale of convertible bond issuance has gradually increased.However,due to the insufficient understanding of the value of convertible bonds by market investors,blind conversions have occurred from time to time.Along with the expansion of the size of convertible bonds,a large number of convertible bonds converting stocks has increased the volatility of the stock market,which affects the stability of the capital market.At the same time,the decline in stock prices is not conducive to the long-term development of enterprises.Based on the analysis of the current situation of the chinese convertible bond market,this paper studies the relationship between convertible bond conversion and the stock market price,so as to guide convertible bond investors to exercise their right to transfer reasonably.Based on the theory of signal transmission,herding effect and prospect theory,and using the event research method and multiple regression model,the thesis studies the effect of the stock price on convertible bonds conversion and the impact of the underlying stock price on convertible bonds.On the basis of introducing the research background,research status and development of the convertible bond market,the article first studies the relationship between convertible bond conversion and stock price from the perspective of theoretical analysis: in terms of the conversion effect of convertible bonds,the thesis uses Ross' s signal transmission theory and herd effect to analysis and finds that convertible bonds converting stocks lowers the stock market price and affects the stability of the stock market;in terms of the stock price influencing factors of convertible bonds,the article uses the prospect theory to analyze the“disposal effect”in the securities market finding that not only the stock price of the current-day stock has an impact on the convertible bonds,but also the cumulative yield of the underlying stock in the past period has a positive impact on the convertible bonds.Then,on the basis of theoretical analysis,selecting the stock conversion data of chinese convertible bond investors in 2008-2018 and the target stock market price and applying event research method and multiple regression model,empirically study the relationship between convertible bond conversion and stock price.The study found that convertible bond conversions cause the underlying stock to generate a negative cumulative abnormal rate of return in the short term,and the stock price declines;at the same time,the higher the historical cumulative rate of return on the underlying stock,the greater the conversion of the convertible bonds,that is,the historical cumulative yield of the underlying stock has a positive impact on the convertible bonds.According to the research conclusions,the thesis puts forward corresponding suggestions from three aspects: conducting special lectures on convertible bonds,improving the design of convertible bonds,and developing convertible bond investment funds.