A Case Study On Abnormal Reduction Of Convertible Bonds Held By Major Shareholders Of Juewei Company

Since 2017,the promulgation of the "new refinancing regulations" has tightened the financing channels of private placement,and the convertible bond financing as an indirect equity financing method has been encouraged by the policy.In the capital market,the convertible bond market has grown rapidly and become one of the mainstream ways of financing.Over the past three years,the financing scale of convertible bonds has shown an increasing trend year by year,which reflects that convertible bonds have gradually become the preferred way of corporate financing.Major shareholders subscribe for convertible bonds through directional placement.After major shareholders can trade convertible bonds,it is common for them to reduce their holdings quickly and at the top within three months.Using the methods of literature research,case study and event st udy,this paper studies the abnormal reduction behavior and its impact of major shareholders of Juewei company.The reduction of convertible bonds by major shareh olders includes small decentralized reduction based on the company’s capital needs and the red uction of all holdings by major shareholders holding more than 20% of the issuance share of convertible bonds in a short period of three months in accordance with the upper limit of reduction stipulated by laws and regulations.The major shareholders of Ju ewei company have reduced their holdings of convertible bonds of Juewei company for three consecutive times within three months,and the reduction share,single r eduction volume and total time span of all reduction have reached the upper limit of relevant securities requirements.This paper analyzes the behavior of major shareholders of Juewei company holding convertible bonds and reducing them rapidly in a short t ime from three aspects of motivation,path and purpose,so as to reveal the impact of their abnormal reduction motivation.The case analysis shows that prior to the issuance of convertible bonds,Jue Wei food was in good financial condition and had no shor tage of funds,while the major shareholders could obtain the opportunity to place convertible bonds and reduce their holdings of restricted shares by purchasing the company’s convertible bonds.From the perspective of the impact of convertible bond issuance,based on the existing data,the vast majority of convertible bond issuance currently has no breaking risk.The majority shareholders benefit from the reduction of their holdings by using convertible bonds.At the same time,it causes the fluctuation of the company’s stock price,affects the interests of small and medium-sized investors,affects the company’s follow-up financing and the good financing environment of convertible bond financing market.The behavior of large shareholders using short-term and rapid reduction of corporate convertible bonds has had a certain degree of adverse impact on corporate governance,small and medium-sized investors and market environment.This paper puts forward preventive measures for large shareholders using convertibl e bond financing to reduce their holdings quickly from the perspectives of convertible bond cl ause design,corporate internal governance,external supervision and strengthening investors’ risk awareness.The research of this paper provides early warning fo r preventing major shareholders from arbitrage through reducing their holdings of convertible bonds in advance,and provides reference for protecting the interests of small and medium-sized investors,promoting the benign development of convertible bond ma rket and helping listed companies create a good financing environment.