Journal of Financial Economics Vol. 41 No. 2 1996
The pricing of convertible debt offerings
Abstract
We present the first empirical evidence on the pricing of convertible debt offerings. Using a sample of 91 convertible debt offerings from the period 1988–1992, we show a significant mean initial excess return of 1.11%. Our underpricing result is invariant to zero/nonzero coupons, maturity, issue size, or bond ratings. Further analysis reveals that various types of risk inherent in the new convertible issues are useful in explaining the cross-sectional variation in the initial excess returns. We offer an explanation for our results based on the arguments of the differential information model.
- DOI
- 10.1016/0304-405x(95)00864-b
- Volume
- 41
- Issue
- 2
- Pages
- 231-248
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref