TY - JOUR
T1 - A comparison of the stock market reactions of convertible bond offerings between financial and non-financial institutions
T2 - do they differ?
AU - Li, Hui
AU - Li, Hong
AU - Siganos, Antonios
PY - 2016/5/1
Y1 - 2016/5/1
N2 - 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 market-specific characteristics as well as the level of short selling pressure induced by convertible bond arbitrageurs.
AB - 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 market-specific characteristics as well as the level of short selling pressure induced by convertible bond arbitrageurs.
KW - Convertible bond announcement effect
KW - financials
KW - regulation
UR - https://www.scopus.com/pages/publications/84903420075
U2 - 10.1016/j.irfa.2014.06.004
DO - 10.1016/j.irfa.2014.06.004
M3 - Article
SN - 1057-5219
VL - 45
SP - 356
EP - 366
JO - International Review of Financial Analysis
JF - International Review of Financial Analysis
ER -