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Convertible bonds issued in the bear market period: evidence from Taiwan

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  • Yensen Ni
  • Paoyu Huang

Abstract

We argue that the behaviour of enterprises might be modified or even changed completely after black swan events occur. We explore why high-tech firms preferred to issue convertible bonds in 2001-2003, the bear market period after the tech bubble in Taiwan. We show that firms issuing convertible bonds are those with low directors' holding ratio and high debt ratio. Results also reveal that corporate governance was worse in the firms that issued convertible bonds, as revealed by the finding that the directors' holding ratio of these issuing firms declined considerably. This finding also implies that corporate governance issues become more serious after black swan events.

Suggested Citation

  • Yensen Ni & Paoyu Huang, 2015. "Convertible bonds issued in the bear market period: evidence from Taiwan," Applied Economics, Taylor & Francis Journals, vol. 47(42), pages 4501-4510, September.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:42:p:4501-4510
    DOI: 10.1080/00036846.2015.1031871
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    Cited by:

    1. Woo Sung Kim & Sekyung Oh & Halil Kiymaz, 2023. "Motives and market reactions to convertible bonds and bonds with warrants issuance in an emerging market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2449-2474, July.
    2. Yensen Ni & Yirung Cheng & Yulu Liao & Paoyu Huang, 2022. "Does board structure affect stock price overshooting informativeness measured by stochastic oscillator indicators?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2290-2302, April.
    3. Ni, Yensen & Huang, Paoyu & Chen, Yuhsin, 2019. "Board structure, considerable capital, and stock price overreaction informativeness in terms of technical indicators," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 514-528.
    4. Yensen Ni & Yulu Liao & Paoyu Huang, 2017. "Foreign Institutional Investors, Shareholding Change, and Corporate Governance," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(4), pages 764-775, April.

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