Subscription And Short-term Returns Of Convertible Bonds

Traditional financial management theory believes that: Generally,when companies face financing activities,the first is to use the company's retained earnings for financing,the second is to consider debt-based financing,and the last is to issue new shares.Therefore,bond and stock financing are two of the company's most basic financing activities.For listed companies in China's capital market,the regulatory authorities have tightened the supervision of listed companies' refinancing through targeted issuance.However,refinancing through the issuance of convertible bonds has attracted the attention of regulators and listed companies.On the other hand,for investors,the bond characteristics and option characteristics of convertible bonds allow investors to enjoy the investment advantages of "no ceiling,no bottom guarantee".Due to the increase in the frequency of convertible bonds issuance and the lowering of purchase thresholds,as well as lower investment risks,more individual investors have begun to participate in the purchase and investment of convertible bonds,and the scale of convertible bond transactions has been increasing.Based on the above background,this article starts from the three aspects of convertible bond characteristics,market characteristics,and company characteristics.From the perspective of theoretical and empirical research on convertible bond purchase intentions and investment,evidence since the credit subscription are studied.Select explanatory variables based convertible bonds themselves,market characteristics,and company characteristics,and build a multivariate regression model with the success rate of subscription,the first-day return on the market,and short-term returns after listing.To address the asymmetry of convertible bond returns,threshold regression will be performed on factors such as short-term earnings after listing and the value of the conversion.Through empirical research,this paper draws the following basic conclusions: First,during the purchase of convertible bonds,conversion value,the value of the pure debt,the issue scale,and the original shareholder's placement all have a significant impact on the success rate of subscription.Since the implementation of the credit subscription,more individual investors have participated in the purchase of convertible bonds,and the success rate of convertible bonds has been more susceptible to market sentiment.Stock market trends and market liquidity have a significant positive effect on investor purchases.Positive impact,that is,under the conditions of active market transactions and sufficient liquidity,investors will have good expectations of convertible bonds and their underlying shares.At this time,investors will choose to actively purchase convertible bonds.However,the characteristics of the company have a weak influence on investors' willingness to purchase.Second,the first-day return of convertible bonds is also affected by convertible bonds,market sentiment,and issuing companies.The attributes of convertible bonds and the attributes of bonds are still the main factors affecting the first day's return on the market.In addition,the investment income of convertible bonds will also be affected to a certain extent by market sentiment and fundamental factors and valuation indicators of the issuing company.Different from the subscription period,the first-day earnings of convertible bonds have been differentiated.If the issuing company has weak profitability and the company's economic strength is weak,the first-day earnings of convertible bonds are lower.Third,further research found that between the short-term returns of convertible bonds and the value of convertible shares,there is indeed a single threshold effect with a monotonous increase,with a threshold of 94.06: due to the option attributes,the impact of high convertible value on short-term returns is enhanced;When the value of the conversion is low,the investment value of the convertible bonds mainly depends on the safety value bottom line provided by the debt characteristics due to the bond properties,so the impact of the low conversion value on the short-term returns is weakened.The conclusions obtained in this paper have certain practical significance.First,from the perspective of investors,the main factor affecting the purchase and investment of convertible bonds is the characteristics of convertible bonds.The value of convertible bonds is more important than the value of pure bonds,and the performance of convertible bonds is weak.The investment of convertible bonds should pay more attention to the underlying stocks,and correctly understand and grasp the characteristics of convertible bonds issuance,while taking into account market trends and emotions,and make rational decisions on purchase and investment of convertible bonds.Secondly,from the perspective of the issuer,because the design of convertible bonds and the characteristics of the company have a small impact,listed companies need to start from their own financing needs and company characteristics,design convertible bond products that meet their own characteristics,and increase The promotion of convertible bond products has attracted investors to actively participate in the purchase and investment of convertible bonds.Finally,from the perspective of the regulator,the restrictions on the terms of convertible bonds can be appropriately relaxed to further improve the pricing efficiency of the convertible bond market,allow diversified and differentiated product designs,increase the diversity of issuers in the market,and attract more external funds entered.At the same time,listed companies and regulators also need to find the factors that restrict the development of the convertible bond market,balance the conflicts of interest,and create a better environment for the development of the convertible bond.