Analysis On The Motivation And Effect Of The Issuance Of Convertible Bonds By Tongrentang

Convertible bond is a kind of investment and financing tool that has the nature of both ordinary bond and option(warrant),which has strong attraction because of its dual characteristics,and has become a supplement to ordinary bond and stock and other financing tools.China's convertible bond financing market started late and developed in a short period.However,with the continuous improvement of the convertible bond market system and policy mechanism,the issuance amount and market circulation value of convertible bonds in China have been continuously improved,and gradually convertible bond has become the financing choice of many enterprises.In particular,in 2017,China's securities regulatory commission issued new rules on financing,which limited the time interval between additional rights offering and other financing activities of non-public issuance by listed companies to 18 months.However,the issuance of convertible bonds was not subject to this regulation,which also set off a wave of issuance of convertible bonds.This paper selects Tongrentang,a listed pharmaceutical manufacturing company in China,to conduct an in-depth analysis on its issuance of convertible bonds,and discuss the motivation of its issuance of convertible bonds for financing and the financing effect of such financing activities,so as to provide a reference for the issuance of convertible bonds by listed companies in China.Firstly,this paper expounds the research background and significance of issuing convertible bond financing.And the domestic and foreign theoretical researches of convertible bonds are summarized.Then the paper analyzes the financing situation and financing motivation of the convertible bonds of Tongrentang.Then,the market reaction,financial effect,operating effect and influence on corporate control and corporate governance of Tongrentang after issuing convertible bonds are analyzed by means of event study,financial index method,comparative study method and EVA enterprise value evaluation method.Then the conclusion of case analysis is drawn:the market reaction of convertible bonds issued by Tongrentang is large,which has some influence on the company's performance;it has the buffer function to its equity dilution,and enhances the company's governance ability;The timing of redemption is reasonable and the financing cost of the enterprise is reduced.The issue is conducive to the optimization of Tongrentang's capital structure;Finally,four suggestions are put forward according to the case study:enterprises should choose the appropriate issuing and redemption time for issuing convertible bonds;Enterprises can choose convertible bond financing to optimize the capital structure of enterprises;Enterprises should reasonably judge the applicability of convertible bond financing;The country can relax the issuance requirements of convertible bonds appropriately,so as to provide more enterprises with one more sound financing option.It is hoped that this study can provide help for this financing model to play its greater market value in the future,and promote the healthy and orderly development of China's capital market.