A Study on the Bifurcation of the Proceeds from Convertible Bonds Issuance and Its Policy Significance for Chinese Accounting Standards

Jinghua Wang, Liqiong Yao

Abstract


It is difficult to separate the proceeds from a convertible bonds issue into debt and equity components. Based on some previous different approaches, there is a focus on the improved approach whose views are convertible bond issue proceeds can be separated into accrual debt value, accrual equity value and accrual option value according to the characteristics of debt, equity and hybrid securities with embedded option of convertible bonds. It is concluded that the improved approach can be more in accord with modern financial theory and provide a more accurate evaluation of capital structure. And there are some policy significances for Chinese Accounting Standards.

Full Text: PDF DOI: 10.5539/ijbm.v4n11p158

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International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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