Timing of convertible debt issues
Abbreviated Journal Title
J. Bus. Res.
The popularity of convertible debt as a financing vehicle waxes and wanes. In this article, we investigate whether the timing of convertible debt issues can be explained by three reported reasons for its use as a financing vehicle. Specifically, we reexamine the long-standing beliefs that convertibles are wed as "debt sweeteners" and there are "hot issue" markets for these securities. In addition, we examine whether convertibles help diminish the agency conflict between bondholders and stockholders as suggested by Brennan and Schwartz (1988). Our empirical results suggest that. (1) corporate managers issue convertible debt as debt sweeteners and (2) more convertible debt is issued in hot markets. (C) 1999 Elsevier Science Inc. All rights reserved.
Journal of Business Research
"Timing of convertible debt issues" (1999). Faculty Bibliography 1990s. 2736.