전환사채 발행자의 회계처리와 주가 변화에 따른 재무적 영향: 전환권 분류를 중심으로

Recently, many Korean convertible bond issuers reported large valuation losses on derivatives after their stock price increased, leading to significant increases in leverage and, for some extreme cases, negative net assets. To understand this counterintuitive phenomenon in which good news to a company (i.e., stock price increases) lead to the deterioration of financial conditions, this study provides theoretical explanations on the accounting treatments for convertible bonds. Specifically, the study explains that embedded conversion rights are classified as equity (liabilities) when convertible bonds are issued without (with) a refixing clause and how this classification of the conversion rights affects the initial measurement and subsequent valuation of conversion rights. Relatedly, this study analyzes how the classification of conversion rights affects the convertible-bond issuers’ future cash outflows, debt-to-equity ratios, and level of retained earnings, and show that information users can infer the probability of conversion from the issuers’ financial statements. Lastly, the study applies the aforementioned theoretical discussions to a real case of convertible bond issuance (Kyung Nam Pharmaceutical Co., Ltd.). This study enhances the understanding of convertible bonds and embedded derivatives by bridging the gap between accounting textbooks that mainly introduce convertible bonds with fixed conversion ratios and practices that more frequently trade convertible bonds with a refixing clause.