INTRA-INDUSTRY EFFECTS OF COVNERTIBLE BONDS ISSUE:THE CASE OF MANUFACTURING INDUSTRY IN CHINA

摘要

This paper analyzes the reaction of the rival firms to the convertible bond (CB) issue announcements of the firm which initially annouce CB issuing in the industry. Seemingly Unrelated Regression (SUR) method is used here to measure the intra-industry effects on the Board Notice and issue annoucement date of convertible bonds issuing. The results show most of the rival firms’market reactions are positive on the Board Notice date, while negative on the issue announcement date. The implication of the results is that CB issue annoucement is good news for rival firms when an intra-industry firm initially annouce CB issue application. CB issue annouce ment indicates a potential new financing channel for the whole industry. However, annoucment of CB issue plan approved is bad news for rival firms since CB issuing could increase issuer’s market competition in the in dustry.