The pricing of convertible debt offerings

We present the first empirical evidence on the pricing of convertible debt offerings. Using a sample of 91 convertible debt offerings from the period 1988–1992, we show a significant mean initial excess return of 1.11%. Our underpricing result is invariant to zero/nonzero coupons, maturity, issue si...

Ausführliche Beschreibung

Gespeichert in:
Bibliographische Detailangaben
Veröffentlicht in:Journal of financial economics 1996-06, Vol.41 (2), p.231-248
Hauptverfasser: Kang, Jun-Koo, Lee, Yul W.
Format: Artikel
Sprache:eng
Schlagworte:
Online-Zugang:Volltext
Tags: Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
Beschreibung
Zusammenfassung:We present the first empirical evidence on the pricing of convertible debt offerings. Using a sample of 91 convertible debt offerings from the period 1988–1992, we show a significant mean initial excess return of 1.11%. Our underpricing result is invariant to zero/nonzero coupons, maturity, issue size, or bond ratings. Further analysis reveals that various types of risk inherent in the new convertible issues are useful in explaining the cross-sectional variation in the initial excess returns. We offer an explanation for our results based on the arguments of the differential information model.
ISSN:0304-405X
1879-2774
DOI:10.1016/0304-405X(95)00864-B