Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/469
Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Why do companies issue convertible bond loans? An empirical analysis for the Canadian market
Authors: Loncarski, Igor
ter, Horst Jenke
Veld, Chris
Contact Email: c.h.veld@stir.ac.uk
Keywords: Security issuance decision
Convertible bonds
Wealth effects
Agency costs
Issue Date: Sep-2008
Publisher: John Wiley & Sons, Ltd.
Citation: Loncarski I, ter Horst J & Veld C (2008) Why do companies issue convertible bond loans? An empirical analysis for the Canadian market, Canadian Journal of Administrative Sciences, 25 (3), pp. 214-236.
Abstract: To identify issuer motives, we study the determinants of announcement effects of convertible debt issues in the Canadian market. Classified into equity- and debt-like, wealth effects are significantly more negative for equity-like convertible bond issuers. Equity-like convertibles are significantly negatively affected by agency costs of equity. However, agency costs of debt have no significant effect on debt-like convertibles. Consistent with Stein (1992), this suggests convertibles in particular represent a substitute for equity. Moreover, convertible debt offers announced by income trusts experience significantly less negative wealth effects than offers by nontrusts - a finding explained by a more debt-like convertible design, very low agency costs of equity in case of income trusts, or both.
Type: Journal Article
URI: http://hdl.handle.net/1893/469
DOI Link: http://dx.doi.org/10.1002/cjas.64
Rights: The Publisher John Wiley & Sons does not allow systematic external distribution of this Work, however authors can distribute a free copy to a colleague for the advancement of scholarly or scientific research or study, or for coroporate informational purposes. Therefore use the request copy feature at the foot of the STORRE record to request a copy directly from the author.; This is the author's final, refereed article. this is a preprint of an article published in Canadian Journal of Administrative Sciences, 25, 3, 214, 2008. The publisher version is available at: http://www.interscience.com
Affiliation: University of Ljubljana
Tilburg University
University of Stirling

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