Correspondence: Steven Li, International Graduate School of Business, University of South Australia, GPO Box 2471, Adelaide SA 5001, Australia. E-mail: steven.li@unisa.edu.au

¹is a professor at the Institute for Economics and Lingnan (University) College, Sun Yat-Sen University. He holds a PhD from Xiamen University, China and an MBA from School of Business, Dalhousie University, Canada. His current research interests include financial economics and monetary economics. Some of his recent publications are papers in Applied Economics Letter, the International Journal of Accounting and Auditing and Performance Evaluation.

²is a research fellow at GF Securities Co., Ltd. He holds a PhD from Sun Yat-sen University, China. His current research interests are asset pricing and derivatives.

³is an associate professor of Finance at the University of South Australia. He holds a PhD from Delft University of Technology, The Netherlands, an MBA from Melbourne Business School and a Bachelor of Science degree from Tsinghua University, China. He has taught at Queensland University of Technology, Edith Cowan University and Tsinghua University. His current research interests are mainly in quantitative finance and financial management. Some of his recent publications include papers in Asia-Pacific Financial Markets, Review of Quantitative Finance and Accounting, Monetary and Economics Studies, and Applied Mathematical Finance.

Received 25 February 2009; Revised 25 February 2009.

Abstract

This study examines the valuation of primary issue convertible bonds (CBs) in China. It proposes and tests a valuation model based on partial least squares regression, by using data from the Chinese stock markets. The study finds the model to be effective, and identifies six important determinants for valuing primary issue CBs in Chinese stock markets.