碩士 靜宜大學 財務金融學系 105 This study investigates whether the convertible bond (CB) issuing firms cater to investors through capital investment (capital expenditure). CB’s “hybrid” characteristic makes it an excellent sample to verify this topic. Following Fu (2010), we measure investment avtivities and abnormal investment of CB firms. The main research structures are: (1) Examining the catering behavior to CB potential investors through capital investment; (2) Examining the catering behavior to existing CB members post no conversion through capital investment; (3) Examining the catering behavior to new common stock holders post-conversion; and (4) Comparing the capital investment pattern of “no conversion” and “conversion” samples to obtain in-depth evidence on asset substitution agency problem. The empirical results show that CB issuing firms overinvest more than matching firms. It shows that the investor will be deemed to equity and firms occurred overinvestment behavior in catering to potential investors. We also evidence that “conversion” CB firms have overinvestment behavior in catering to existing CB holders. Further evidence indicates that firms will be overinvestment behavior in catering to "conversion" than “no conversion”. This study not only extends the research for agency theory, asset substitution, capital investment, catering theory, but also provides managerial implications on the CB issuance, CB investments, abnormal capital investment decoding.