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A comparison of the stock market reactions of convertible bond offerings between financial and non-financial institutions: do they differ?

journal contribution
posted on 29.01.2016 by Hui Li, Hong Liu, Antonios Siganos
We focus on the stock price reaction to convertible bond offering made by financial institutions and find that the cumulative abnormal return over the three day interval around convertible bond issuance is 1.41 percentage higher than that for non-financial institutions. This result supports our hypothesis that since financials are heavily regulated, the market is less likely to assume that the issuance of convertible bond by financials signals information that are overvalued. Our results remain robust after controlling for a number of firm-, issue-, and marketspecific characteristics as well as the level of short selling pressure induced by convertible bond arbitrageurs.

History

School

  • Business and Economics

Department

  • Business

Published in

International Review of Financial Analysis

Citation

LI, H., LIU, H. and SIGANOS, A., 2014. A comparison of the stock market reactions of convertible bond offerings between financial and non-financial institutions: do they differ?. International Review of Financial Analysis. Available online 24 June 2014, doi:10.1016/j.irfa.2014.06.004

Publisher

© Elsevier Inc.

Version

VoR (Version of Record)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2014

Notes

Closed access

ISSN

1057-5219

Language

en

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