An Empirical Analysis on the Motivation to Issue Convertible Bond

Theoretical analysis and empirical examination on Chinese listed companies issuing convertible bond over the period from 2002 to 2004 are conducted.The research results indicate that the back-door financing hypothesis based on the information asymmetry cannot explain thoroughly the behavior of the Chinese listed companies to issue convertible bonds.Large-size financing is beneficial for the maximization of the control equity of the listed companies.The depressed price expression of the target bond stems from the fact that over recent years listed companies have been wild about the issuance of convertible bonds.At the same time,the inducing policies of the government have further impelled the rapid development of the market of convertible bonds over past years.