Empirical Study on Why Listed Companies in China Issue Convertible Bonds

This article tries to analyze the motivation of issuing convertible bonds in listed companies in China. We select listed companies as samples which had issued convertible bonds, stocks and debts during Apr.28, 2001-Dec.31, 2007 and build up an indicator system of internal firm-specific and external economy-wide factors based on the framework of two-step financing decision-making. Through single factor analysis and logistic multiple regression analysis, we find that the real motivation of issuing convertible bonds in listed companies in China is taking convertible bonds as ¿delayed equity¿ instead of ¿sweetened debts¿. The model shows that the economy-wide factor is a key factor of financing decision-making of companies.