This paper analyzes the case of Wharf’s participation in Greentown China’s
corporate governance under the investment of convertible bonds, and brings the
case of market value growth. It reveals that the strategic investors have
passed the three stages of “value support—value driven—value realization”. The bond issuer realizes value creation
and achieves a win-win situation for both parties. The study found that
strategic investors and bond-issuing companies have complementary resources and
positioning strategies to provide strong value support for cooperation between
the two parties. The key processes driven by value include the investment phase
and the corporate governance phase. In the investment phase, choosing the right
financing method and designing the refined terms provide the basis for strategic
investors to participate in corporate governance. In the corporate governance
stage, strategic investors can restrain
overinvestment by issuing sound financial policies bonds, and participate in
the investment decision-making of bond-issuing enterprises to create
business synergies. The realization of value is reflected in the two aspects of
market value improvement and business improvement.
References
[1]
Wang, D.N., Jiao, S.L. and Wen, N.Q. (2009) Analysis of Redemption Strategy of Convertible Bonds Based on “Back Door Equity”. Social Science Forum, No. 3, 78-81.
[2]
Korkeamaki, T.P. and Moore, W.T. (2004) Convertible Bond Design and Capital Investment: The Role of Call Provisions. Journal of Finance, 59, 391-405.
https://doi.org/10.1111/j.1540-6261.2004.00636.x
[3]
Zhang, G.Q. and Lian, P. (2009) Convertible Debt Financing and Institutional Investors’ Encroachment Behavior—Based on the Case Study of Hualing Pipeline Convertible Bonds. Management World, No. S1, 110-120, 133-134.
Qu, W.Z. and Lin, Z.X. (2009) Actions for Convertible Bonds Issued by Chinese Listed Companies: “Backdoor Equity” vs “Agent Cost”. China Industrial Economy, No. 8, 141-151.
[6]
Mayers, D. (1998) Why Firms Issue Convertible Bonds: The Matching of Financial and Real Investment Options. Journal o f Financial Economics, 47, 83-102.
https://doi.org/10.1016/S0304-405X(97)00038-X
[7]
Green, R.C. (1984) Investment Incentives, Debt, and Warrants. Journal of Financial Economics, 13, 115-136. https://doi.org/10.1016/0304-405X(84)90034-5
[8]
Zhu, J.G., Zhang, Q. and Tang, G.L. (2012) Convertible Bonds: Financing Tools or Institutional Arrangements—A Case Study Based on Bain Capital’s Investment in Gome Convertible Bonds. China’s Industrial Economy, No. 5, 122-134.
[9]
Sheng, Y.H. and Zu, J. (2014) An Empirical Study on the Impact of Different Types of Strategic Investors on the Performance of Listed Companies. Investment Research, 33, 120-129.
[10]
Megginson, W.L. and Netter, J.M. (2001) From State to Market: A Survey of Empirical Studies on Privatization. Journal of Economic Literature, 39, 321-389.
https://doi.org/10.1257/jel.39.2.321
[11]
Berger, A.N., Hasan, I. and Zhou, M.M. (2009) Bank Ownership and Efficiency in China: What Will Happen in the World’s Largest Nation? Journal of Banking & Finance, 33, 113-130. https://doi.org/10.1016/j.jbankfin.2007.05.016
[12]
Zhang, Z.Y. and Song, Z.J. (2010) Research on the Effect of Overseas Strategic Investors Holding Chinese Listed Banks. Nankai Management Review, 13, 106-114.
[13]
Yin, X., Wang, W. and Lin, X. (2009) Empirical Analysis and Supervision of the Introduction of Strategic Investors by Listed Companies in Yunnan Province. Economic Problems Research, No. 12, 133-139.
[14]
Zhang, S., Zhang, H. and Zhang, S. (2012) Research on the Introduction of Strategic Investors by Small and Medium-Sized High-Tech Enterprises in China. Economic Outlook of the Bohai Sea, No. 6, 21-23.
[15]
Li, J. and Jin, Z. (2007) Research on Partner Selection, Cooperation Relationship and Alliance Performance of Strategic Alliances. Science of Science and Technology Management, No. 11, 161-166.
[16]
Lu, Z. and Guo, W. (2016) Research on Value-Driven Market Value Management Model—A Case Study of Market Value Management of Jiesai Technology. Financial Monthly, No. 31, 87-90.
