Journal of Financial Economics Vol. 32 No. 1 1992
Convertible bonds as backdoor equity financing
open access
Abstract
This paper argues that corporations may use convertible bonds as an indirect way to get equity into their capital structures when adverse-selection problems make a conventional stock issue unattractive. Unlike other theories of convertible bond issuance, the model here highlights: 1) the importance of call provisions on convertibles and 2) the significance of costs of financial distress to the information content of a convertible issue.
- DOI
- 10.1016/0304-405x(92)90022-p
- Volume
- 32
- Issue
- 1
- Pages
- 3-21
- Language
- en
- Sources
- crossref bibtex:phds-export.bib openalex