Long-run abnormal performance following convertible preference share and convertible bond issues: New evidence from the United Kingdom

Abhyankar, Abhay; Ho, Keng-Yu

doi:10.1016/j.iref.2004.03.001

Cited by 5 publications

(8 citation statements)

References 43 publications

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“…This underperformance generally remains significant when considering long-run analysis of stock returns following CB issues. These findings are also consistent with Spiess and Affleck-Graves (1999) for the USA; Kang et al (1999), and Cheng et al (2005) for Japan; and Abhyankar and Ho (2006) for the UK. Recently, Chang et al (2007) examined a long-term period after the issue of CBs in Taiwan.…”

Section: Market Reactions To the Announcement Of Cb Issuessupporting

confidence: 87%

“…According to Eckbo, Masulis and Norli (2000), one of the explanatory factors would be the 'timing' of the issue, which is often launched after a sharp rise in the share price. deferred capital' inherent in most CB issues, Abhyankar and Ho (2006) point out that the significance of the negative abnormal performance decreases or vanishes when using a conditional asset pricing model rather than a classical buy-and-hold abnormal performance return analysis. Thus, estimates of long-term abnormal returns seem to be very sensitive to the methodology selected to adjust for risk, and are not necessarily a stylised feature of the data.…”

Section: Market Reactions To the Announcement Of Cb Issuesmentioning

confidence: 99%

“…(1999), and Cheng et al . (2005) for Japan; and Abhyankar and Ho (2006) for the UK. Recently, Chang et al .…”

Section: Cb Issues and Underlying Stock Market Reactions: Theoretimentioning

confidence: 99%

“…6 6 For a summary of main results in recent studies using data from the USA and Japan, see Abhyankar and Ho (2006), p. 100, Table 1. …”

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confidence: 99%

“…For a summary of main results in recent studies using data from the USA and Japan, seeAbhyankar and Ho (2006), p. 100, Table 1. C 2008 The Authors Journal compilation C 2008 Blackwell Publishing Ltd…”

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confidence: 99%

See 4 more Smart Citations

The Consequences of Issuing Convertible Bonds: Dilution and/or Financial Restructuring?

Gillet¹,

Bruslerie²

2010

Euro Fin Management

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Historically, most convertible bond (CB) issues have been converted to equity sooner or later. The announcement of a CB issue will bring about a future dilution of the firm's capital, and is often followed by a drop in share price. However, a CB issue by itself creates future value for the shareholders if it enables the firm to make profitable investments. It can also issue a positive signal regarding the restructuring of the firm's financial liabilities and its attempts to optimise its financial structure. These positive effects, if they occur, will develop gradually after the issue, and cannot be identified by a simple short-term event analysis of a CB issue announcement. In this paper, we test the significance of the dilution effect, coupled with a possible value creation effect, using data from the French stock market. We introduce a comparison between dilutive convertibles and non-dilutive exchangeable bonds. By integrating different corrections and by selecting a window of analysis over a longer period after the announcement of the issue, we show that the negative cumulative average abnormal returns generally observed in previous studies become non-significant. This absence of global incidence is indicative of large differences in individual behaviour by issuers of CBs, and leads us to take into account the strategic choices linked to the issue of a CB. Two goals, often described as 'investment financing' or 'financial restructuring', may exist when issuing, and may appear to explain the size of the abnormal returns.

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Section: Market Reactions To the Announcement Of Cb Issuessupporting

confidence: 87%

Section: Market Reactions To the Announcement Of Cb Issuesmentioning

confidence: 99%

“…(1999), and Cheng et al . (2005) for Japan; and Abhyankar and Ho (2006) for the UK. Recently, Chang et al .…”

Section: Cb Issues and Underlying Stock Market Reactions: Theoretimentioning

confidence: 99%

“…6 6 For a summary of main results in recent studies using data from the USA and Japan, see Abhyankar and Ho (2006), p. 100, Table 1. …”

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confidence: 99%

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