Research On Financing Motivation And Effect Of Putai Convertible Bond

Convertible bond,as an innovative bond that can be converted into common stock within a certain period of time,has the characteristics of debt and equity.Due to its dual characteristics,convertible bonds have advantages such as low cost of obtaining funds and optimizing capital structure,so they are favored by many enterprises at home and abroad.Convertible bond entered our country in 1991.It started relatively late compared to Western countries.But in recent years,the legal system and policies related to convertible bond have been improving continuously.In recent years,the Chinese power battery industry has developed rapidly,driven by new energy vehicles.The enterprises in the industry compete fiercely and the financing demand increases.According to statistics,the annual investment,financing and mergers and acquisitions amount of China’s power battery industry in 2021 reached 21.509 billion yuan.In recent years,more and more power battery enterprises choose convertible bonds as a financing tool.This thesis chooses Putailai,the leading enterprise of Chinese power battery industry,to analyze the financing motivations and effects of its convertible bonds.This thesis expounds the research background and significance,sorts out the literature related to convertible bonds at home and abroad,and summarizes the theories related to convertible bonds.Through in-depth research,it is found that Putailai has the following motivations for issuing convertible bond financing: external financing is needed,capital structure is optimized,financing cost is saved,equity dilution is delayed,and debt repayment pressure is great.The Z-score model,event study,counterfactual analysis and economic added value were adopted to analyze the financial risk of Putailai,the market reaction,financial performance and business performance of Putailai’s convertible bond issuance announcement,and the effect analysis was carried out on the achievement of the motivation.At the same time,it constructs the comprehensive evaluation system of the time sequence before,after and after the issuance to evaluate the overall financing effect.This thesis draws the following conclusions through the case analysis of Putailai ’s issuance of convertible bond financing: The financing motivation of Putailai convertible bonds has basically been achieved,and the required funds have been successfully raised while the project has realized earnings,the capital structure has been successfully optimized,and the equity dilution effect has been delayed.However,due to the fact that Putailai convertible bonds trigger the redemption terms quickly and choose redemption,the survival time is short,and the financing cost is not low.Before the issuance of convertible bonds,the issuance risk and financial risk of Putailai were small,and the overall excess yield of Putailai’s announcement of the issuance of convertible bonds fluctuated greatly,bringing negative market effects.After the issuance of convertible bonds,the gross profit rate and earnings per share index of Putailai increased,while the return on equity decreased.The issuance of convertible bonds had certain positive and negative effects on the company’s financial performance.Finally,based on the research conclusions,this thesis puts forward the following four suggestions from the perspective of listed companies’ financing: enterprises should strengthen their own risk awareness;Enterprises should be cautious and consider their own situation when issuing convertible bonds;The enterprise should issue and redeem convertible bonds at the right time;Enterprises should reasonably design the terms of issuance of convertible bonds.It is hoped that the research in this thesis can bring help to the subsequent further research on convertible bonds and provide reference for listed companies to carry out convertible bond financing.