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Journal of Corporate Finance Vol. 37 2016

Convertible bond announcement effects: Why is Japan different?

Marie Dutordoir1; Hui Li; Frank Hong Liu2,3; Patrick Verwijmeren4,3,2,5

1 Manchester School of Architecture · 2 University of Glasgow · 3 Adam Smith Institute · 4 The University of Melbourne · 5 Erasmus University Rotterdam

open access

Abstract

U.S. and Japanese firms dominate global convertible bond issuance. Previous research documents more favorable convertible bond announcement effects in Japan than in the U.S. and other developed countries. Using a global sample of convertible bonds issued from 1982 to 2012, we find that the more favorable announcement effects of Japanese convertibles are driven by their stated uses of proceeds. Japanese convertibles more often include capital expenditure as an intended use, while U.S. firms tend to mention general purposes to motivate their offering. Our findings illustrate the value to firms of being more explicit when disclosing the intended use of proceeds of security offerings.

DOI
10.1016/j.jcorpfin.2015.12.006
Volume
37
Pages
76-92
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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