Open AccessFactors Affecting The Equity Price Impacts Of Convertible Bonds
Author(s) -
Bruce R. Kohlman,
Robert C. Radcliffe
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v8i4.6128
Subject(s) - convertible bond , convertible , equity (law) , convertible arbitrage , bond , stock (firearms) , business , stock price , financial economics , monetary economics , economics , finance , capital asset pricing model , structural engineering , arbitrage pricing theory , political science , law , risk arbitrage , engineering , mechanical engineering , paleontology , series (stratigraphy) , biology
This study examines abnormal stock returns associated with both the date a convertible bond issue is announced and the date it is sold. Results suggest the negative stock price effects observed I this and previous studies are due to the equity component inherent in convertible bonds, and an easily observed measure of that equity component is offered. In addition, results suggest that convertible bond issues sold by firms with previously issued outstanding convertibles are met with larger negative abnormal equity returns.