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

Li, H., Liu, H. and Siganos, A. (2015) 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, 45, pp. 356-366. (doi:10.1016/j.irfa.2014.06.004)

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Abstract

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.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Liu, Dr Frank Hong and Siganos, Dr Antonios
Authors: Li, H., Liu, H., and Siganos, A.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:International Review of Financial Analysis
Publisher:Elsevier
ISSN:1057-5219
ISSN (Online):1873-8079

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