Convertible Debt: Financing Decisions and Voluntary Conversion under Ambiguity

Agliardi, Elettra; Agliardi, Rossella; Spanjers, Willem

doi:10.1111/irfi.12057

Cited by 10 publications

(8 citation statements)

References 23 publications

(40 reference statements)

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“…Previous studies found managers are more likely to increase cash holding for the ambiguous future ( Neamtiu et al, 2014 ; Agliardi et al, 2015 ; Breuer, 2017 ; Nishimura and Ozaki, 2017 , etc.) Similarly, our results show the negative influence of ambiguity on cash holding policy.…”

Section: Empirical Analysismentioning

confidence: 99%

“…One issue that contributes to the fuzzy picture of dividend policy and hinders the elaboration of new perspectives is the assumption that people are always rational and will pursue the maximization of personal profits. The rising studies consider behavioral biases in modeling complex decision-making processes ( Agliardi et al, 2015 ). Baker and Wurgler (2004) point out investors’ trading behavior positively respond to dividend payouts, so managers tend to cater to investors for obtaining stock premiums (also see Li and Lie, 2006 ; Ferris et al, 2009 ).…”

Section: Introductionmentioning

confidence: 99%

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The Effects of Behavioral Foundations and Business Strategy on Corporate Dividend Policy

Liao

Lin

et al. 2022

Front. Psychol.

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This study analyzes the influence of behavioral foundation factors and corporate strategic behavior on the formulation of corporate dividend policy. We use the Logit model and the OLS model for estimating the empirical model. The year- and industry-fixed effects are controlled in the model. We consider the behavioral foundations in three dimensions-ambiguity aversions, risk aversion, and loss aversion. The results show firms with high ambiguity or high risk infrequently pay dividends but firms with loss-averse behavior tend to pay dividends. This paper also provides evidence that a firms’ business strategy influences its corporate dividend policy. Aggressive firms inhibit the payout of dividends. In additional tests, we find the results remain unchanged in those firms with high corporate governance or high growth opportunities.

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Section: Empirical Analysismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Effects of Behavioral Foundations and Business Strategy on Corporate Dividend Policy

Liao

Lin

et al. 2022

Front. Psychol.

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“…Traditionally this prediction is based on probabilistic models. Recently, Agliardi et al (2015) introduce ambiguity into a model for convertible debt. From their theoretical model, we deduce that the call delay increases for firms with higher ambiguity aversion or in periods of higher ambiguity.…”

Section: The Financial Distress and Transaction Costs Hypothesismentioning

confidence: 99%

The determinants of the convertible bonds call policy of Western European companies

Adoukonou

Pogamp

Viviani

2021

International Review of Financial Analysis

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This paper analyzes the determinants of the convertible bonds call delay of the Western European firms. This delay is analyzed comparatively to the optimal call policy suggested by Ingersoll (1977a) who argues that in a perfect market, managers should call the convertible bonds immediately when the conversion value reaches the call price. Like the previous studies in the US market, we find that the Western European companies delay the call of their convertible bonds for several weeks. This delay is explained by considering the main theoretical rationales for the convertible bonds call delays (the notice period, the call protection provisions, the cash flow advantage hypothesis, the financial distress and the signaling theory). The results are consistent with the cash flow advantage rationale but less evidence is found for the other theories.

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“…Our NMEU utility evaluates and combines the worst case in negotiators' minds with the standard probabilistic case. Separating risk from uncertainty (Ellsberg, 1961;Abdellaoui et al, 2015;Agliardi et al, 2015), we present conditions for negotiation agreement under ambiguity and incorporate negotiators' aversion to uncertainty and network position in the real options analysis to show how they affect investment outcomes and optimal agreement 2 . We deliberately do not investigate or discuss the role of risk aversion in the real options dynamics since these effects have been well documented in the literature (see e.g.…”

Section: Introductionmentioning

confidence: 99%

Ambiguity aversion in buyer-seller relationships: A contingent-claims and social network explanation

Gao

Driouchi

Bennett

2018

International Journal of Production Economics

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Negotiations between buyers and sellers (or suppliers) of goods and services have become increasingly important due to the growing trend towards international purchasing, outsourcing and global supply networks together with the high uncertainty associated with them. This paper examines the effect of ambiguity aversion on price negotiations using multiple-priors-based real options with non-extreme outcomes. We study price negotiation between a buyer and seller in a dual contingentclaims setting (call option holding buyer vs. put option holding seller) to derive optimal agreement conditions under ambiguity with and without social network effects. We find that while higher ambiguity aversion raises the threshold for commitment for the seller, it has equivocal effects on the buyer's negotiation prospects in the absence of network control. Conversely when network position and relative bargaining power are accounted for, we find the buyer's implicit price (or negotiation threshold) decreases (or increases) unequivocally with increasing aversion to ambiguity. Extending extant real options research on price negotiation to the case of ambiguity, this set of results provides new insights into the role of ambiguity aversion and network structures in buyer-seller relationships, including how they influence the range of negotiation agreement between buyers and sellers. The results also help assist managers in formulating robust buying/selling strategies for bargaining under uncertainty. By knowing their network positions and gathering background information or inferring the other party's ambiguity tolerance beforehand, buyers and sellers can anticipate where the negotiation is heading in terms of price negotiation range and mutual agreement possibilities.

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Convertible Debt: Financing Decisions and Voluntary Conversion under Ambiguity

Cited by 10 publications

References 23 publications

The Effects of Behavioral Foundations and Business Strategy on Corporate Dividend Policy

The Effects of Behavioral Foundations and Business Strategy on Corporate Dividend Policy

The determinants of the convertible bonds call policy of Western European companies

Ambiguity aversion in buyer-seller relationships: A contingent-claims and social network explanation

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