Factors Affecting The Equity Price Impacts Of Convertible Bonds

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Bruce R. Kohlman
Robert C. Radcliffe

Keywords

convertible bonds, abnormal stock returns, equity price

Abstract

This study examines abnormal stock returns associated with both the date a convertible bond issue is announced and the date it is sold.  Results suggest the negative stock price effects observed I this and previous studies are due to the equity component inherent in convertible bonds, and an easily observed measure of that equity component is offered.  In addition, results suggest that convertible bond issues sold by firms with previously issued outstanding convertibles are met with larger negative abnormal equity returns.

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