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Why do companies issue convertible bond loans? : an empirical analysis for the Canadian market

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Author Info
Loncarski, Igor
Horst, Jenke ter
Veld, Chris (Tilburg University, Center for Economic Research)

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Abstract

We examine the wealth effects associated with the announcements of convertible debt offerings in the Canadian market for the period between 1991 and 2004. The average wealth effect for the three day event window is a significantly negative -2.7%. This result is in line with previous studies on other Anglo-Saxon markets, but it is different from other markets where generally no effect or even a positive effect is found. In addition, support is found for the negative effect of both debt- and equity-related agency costs.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 65.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:200665

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Find related papers by JEL classification:
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Loncarski, Igor & Horst, Jenke ter & Veld, Chris, 2006. "The convertible arbitrage strategy analyzed," Discussion Paper 98, Tilburg University, Center for Economic Research. [Downloadable!]
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