Research On The Motivation And Effect Of Convertible Bond Financing Of Listed Companies

The development of enterprises is inseparable from financing,and financing decisions often attract a lot of attention from the capital market.As a financing tool with both bonds and equity,convertible bonds have been valued by companies after the release of the new rules on refinancing,and the number and scale of their issuance have increased significantly.Therefore,in the context of the greater development of convertible bonds,this paper selects Beijing Oriental Yuhong Waterproof Technology Co.,Ltd.as a case study object to study the motivation and effect of the convertible bond "Yuhong Convertible Bond" issued by Oriental Yuhong in September 2017 and the effect after financing.This article first introduces the necessity of refinancing of case companies from the background of large industries;then briefly introduces the listed company Oriental Yuhong,and then reviews and introduces the issuance process of Yuhong’s convertible bonds,including its conversion and delisting;and finally analyzes the motivation for Oriental Yuhong to choose convertible bond financing from two aspects: financing demand and financing method selection.In terms of effect,first of all,the corresponding financing motivations are used to see whether the final effect has actually been achieved;then the indicators and samples are selected from the three aspects of profitability,solvency and operational capacity,and the influence of Oriental Yuhong’s issuance of convertible bonds on the company is analyzed from a financial point of view;finally,the excess yield and cumulative excess yield during the window period are estimated by the event research method,so as to explore the reaction of the capital market to the issuance of Yuhong bonds by Oriental Yuhong.Through the case analysis of the financing of convertible bonds issued by Oriental Yuhong,this paper shows that Oriental Yuhong needs a lot of funds in order to break through its own production capacity bottleneck,and it is difficult for the company to meet the capital needs within the company,coupled with the fact that in order to balance its own capital structure and reduce costs,convertible bonds are the best financing tools.After using convertible bonds to raise funds,it not only successfully obtained funds to break through the bottleneck of production capacity,but also optimized its own capital structure while reducing financing costs,and finally successfully enhanced the competitiveness of the industry and completed the issuance mission.Through the analysis,this paper believes that when choosing a financing method,enterprises should find the most suitable one for themselves through comprehensive analysis,and consider factors such as issuance timing,terms,and scale to minimize negative effects.