The Study of Convertible Bond''s Call Policy in Taiwan

• Main Authors: Chia-yang Chang, 張佳盈
• Other Authors: 詹錦宏
• Format: Others
• Language: zh-TW
• Published: 2002
• Online Access: http://ndltd.ncl.edu.tw/handle/99495560889605765268

碩士 === 長庚大學 === 企業管理研究所 === 90 === Recently, stock markets become hotter, convertible bonds are under good condition and interest rate is lowest in history. This makes lots of companies issue convertible bonds. So this thesis target is study convertible bond. Analyzing the strategy of convertible bond from the time of call with the view of issuing companies. Research targets are focus on all 104 convertible bonds in markets from April 1990 to September 2000. This study wants to probe to convertible bonds with financial structure and issue condition of issuing companies. This study finds companies usually call convertible bonds ahead of time in Taiwan and the call price higher then convertible value 2% ~ 4% is much different with foreign convertible markets. Executing call policy or not is affected by financial ratio. The main factors are “Fixed Asset Turnover Ratio”, “Quick Ratio”, “Total Asset Turnover Ratio”. From financial structure are “ Operating ability” and “debt-paying ability”. Evidence show that executing call policies is no relation with lower financial leverage and just the opposite to Mikkelson’s hypothesis. This is because issuing companies usually have good Operating ability and debt-paying ability. They can lower their debt ratio by executing call policies and make long-term capital use properly. Meanwhile, the accuracy of using Stepwise Regression model to test the sample data of executing call policies group from 1990 to 2000 is 71.43% and for non-executing call policies group is 64%. Furthermore, when using outside sample data in 2000 to test for both executing call policies group and non-executing call policies group, the accuracy is 75%. Executing call policies or not is obviously different from issuing conditions. From evident analysis, issuing companies mainly take account of the amount lower 1 billion, longer time, recallable, lower recall premium. But the best fit model developing by main affected variables has low accuracy. Just thinking issuing conditions is not good enough. The reason is the issuing company executing call policies depending on financial structure of company itself and stock market’s situation not only on issue condition. But we can sure that executing call policies group has longer issue time. This makes higher uncertainly risk for issue companies. If investors convert all at the same time, this will affect capital dispatching plan and even break financial structure. So companies will executing call policies only when the policies won’t affect operating abilities and financial structure .