Effect of the Issuance of Convertible Bonds on the Company's Agency Costs
The separation of ownership rights and management rights on shares of a Joint stock company leads to agency conflicts between shareholders and managers. With the separation of ownership and management of financing funds making the interests of shareholders contradict the interests of its creditors, the company's agency costs come into being as a result. Through an empirical research on agency costs of 79 non financial listed companies who issued convertible bonds during the year 2002 2013 in China, whether the issuance of the convertible bond is beneficial to reduce agency cost of listed companies is examined. The empirical results show that the issuance of convertible bonds contributes to the reduction of agency costs, which supports the assumption concluded from the theoretical researches conducted by foreign researchers that convertible bonds can reduce agency costs in some extent.