Research On The Financing Motivation And Economic Consequences Of Jiuqi Software Convertible Bonds

In order to solve problems such as excessive financing tendency of some listed companies and large arbitrage space in the old fixed increment pricing mechanism,China issued new regulations on refinancing in 2017,which strictly supervised the whole refinancing process.However,convertible bond financing is not restricted by the new rules of refinancing,and the CSRC even further lowered the threshold of convertible bond issuance to promote the development of convertible bond in China’s capital market.Jiu Qi Software is one of the earliest listed companies in the software and information technology service industry to issue convertible bonds.This paper selects Jiuqi software,which issued convertible bond financing in 2017,as the research object,and analyzes the motivation and economic consequences of its convertible bond financing.On the basis of analyzing the general situation of Chinese convertible bond issuance industry,the financing experience of its software and the survival process of its convertible bond,the motivations of issuing convertible bond financing are analyzed from six perspectives: reducing financing costs,project investment needs,less policy constraints,arbitrage motivation of major shareholders,delay dilution effect and tax shield effect.Based on the perspectives of financing cost,market response,financial performance,financial risk and non-financial performance,this paper uses event study,factor analysis and cluster analysis to evaluate the economic consequences of Jiu’s software issuance of convertible bond financing.The research shows that:(1)From the aspect of financing cost,the issuance of convertible bonds reduces the comprehensive cost of capital and optimizes the capital structure of the company.(2)From the perspective of market reaction,both the issuance of convertible bonds and the change of the use of raised funds have negative effects in the short term.(3)From the perspective of financial effect,the positive impact of convertible bond financing on corporate profitability is not obvious,and there may be earnings management behavior after the issuance of convertible bonds;Convertible bond financing enhanced the short-term solvency of its software and the use efficiency of current assets,but the long-term solvency and growth ability were significantly weakened.(4)From the perspective of financial risk,the issuance of convertible bonds improved the company’s anti-risk ability and reduced the financial risk in the year of issuance;In the following period,due to the influence of factors such as improper timing of issuance of convertible bonds,the company generated certain financial risks,but basically kept at a medium-low risk level.(5)From the perspective of the impact on stakeholders,convertible bond financing does not change the controlling position of the actual controller,but large-scale equity conversion will dilute the interests of the original shareholders;Convertible bond financing does not affect the interests of creditors,but for equity capital investors,short-term investment returns are more uncertain,while long-term returns are considerable.At the end of this paper,from the two levels of the company and the regulatory level,the paper puts forward suggestions such as choosing the right issuance time,reasonably planning investment projects,improving profitability,improving risk prevention mechanism,strengthening the management of convertible bond reduction,strengthening external supervision and improving information disclosure system,etc.,hoping to provide reference for other listed companies planning to issue convertible bond financing and government supervision.