**5. Conclusions**

The previous literature posits that convertible bonds negatively affect stock performance. They argue that investors believe that stock prices are overvalued and that companies have high risk because of the existence of information asymmetry. Therefore, stock performance becomes poor after the announcement of convertible bonds. By arguing that companies under financial constraint will cautiously and efficiently use their funds. This study investigates the effects of financial constraints on short- and long-term performances of companies after their announcement of convertible bonds. The empirical results demonstrate that financial constraints do not have any significant short-term effects, but they do have significant positive long-term effects on the performances of companies. In addition, high financial constraints have higher long-term cumulative AR than those with low financial constraints.

Past literature have shown that the companies' convertible bond announcement negatively affect their stock prices. However, the result of our study shows the opposite. Thus, investors are recommended to choose companies with high financial constraints if they are considering investing in those that are going to issue convertible bonds, which is beneficial with regards to planning investment strategies.

**Author Contributions:** C.-C.C., T.-Y.K., C.-C.C. and W.-T.S. contributed to the conception and writing of the article; C.-C.C. and W.-T.S. performed the empirical analysis; C.-C.C. and T.-Y.K. responded to the reviewers' comments and conducted critical revision of the article; T.-Y.K. was responsible for compiling and editing the final version.

**Funding:** This research was funded by the college student research project of Ministry of Science and Technology (MOST 104-2815-C-468-038-H).

**Acknowledgments:** We sincerely thank the two anonymous referees for their valuable comments and suggestions.

**Conflicts of Interest:** The authors declare that there is no conflict of interest regarding the publication of this article.
