Why do european firms issue convertible debt?

European Financial Management

Volumn 10, Issue 2, 2004, Pages 339-373

  Bancel, Franck ^a   Mittoo, Usha R ^b  

^a ESCP EUROPE   (France)

^b UNIVERSITY OF MANITOBA   (Canada)

Author keywords

Convertible debt; Debt sweetener; Delayed equity; European managers; F23; G15; G32; Survey

Indexed keywords

EID: 31644441486     PISSN: 13547798     EISSN: 1468036X     Source Type: Journal    
DOI: 10.1111/j.1354-7798.2004.00253.x     Document Type: Article

References (35)

1. Abhyankar, A. And Dunning, A., ‘Wealth effects of convertible bond and convertible preference share issues: An empirical analysis of the UK Market’, Journal of Banking and Finance, Vol. 23, 1999, pp. 1043–65.
2. Ammann, M., Kind, A. And Wilde, C., ‘Are convertible bonds underpriced? An analysis of the French market’, Journal of Banking and Finance, Vol. 27, 2003, pp. 635–653.
3. Asquith, P., ‘Convertible debt: A dynamic test of call policy. Working Paper Sloan School of Management, MIT, Cambridge MA, 1991.
4. Bancel, F. And Mittoo, U., ‘The determinants of capital structure choice: A survey of European firms’, Working Paper University of Manitoba, ESCP-EAP, 2002.
5. Bayless, M. And Chaplinsky, S., ‘Is there a window of opportunity for seasoned equity issuance?’, Journal of Finance Vol. 51, 1996, pp. 253–278.
6. Billingsley, R. S. And Smith, D. M., ‘Why do firms issue convertible debt?’, Financial Management, Vol. 25, 1996, pp. 93–9.
7. Brennan, M. And Schwartz, E., ‘The case for convertibles’, Journal of Applied Corporate Finance, Vol. 1, 1988, pp. 55–64.
8. Brennan, M. And Kraus, A., ‘Efficient financing under asymmetric information’, Journal of Finance, Vol. 42, 1987, pp. 1225–43.
9. Brigham, E., ‘An analysis of convertible debentures: Theory and some empirical evidence’, Journal of Finance, Vol. 21, 1966, pp. 35–54.
10. Constantinides, G. M. And Grundy, B. D., ‘Optimal investment with stock repurchase and financing as signals’, Review of Financial Studies, Vol. 2, 1989, pp. 445–65.
11. Dann, L. And Mikkelson, W. H., ‘Convertible debt issuance, capital structure change and financing-related information: some new evidence’, Journal of Financial Economics, Vol. 13, 1984, pp. 157–86.
12. De Roon, F. And Veld C., ‘Announcement effects of convertible bond loans and warrant-bond loans: An empirical analysis for the Dutch market’, Journal of Banking and Finance, Vol. 22, 1998, pp. 1481–1506.
13. Eckbo, B. E., ‘Valuation effects of corporate debt offerings’, Journal of Financial Economics, Vol. 15, 1986, pp. 119–51.
14. Essig, S., ‘Convertible securities and capital structure determinants’, PhD Dissertation Graduate School of Business, University of Chicago, Chicago, IL 1991.
15. Fernandez, P., ‘An analysis of Spanish convertible bonds’, Advances in Futures and Options Research, Vol. 6, 1993, pp. 367–92.
16. Graham, J. And Harvey C., ‘The theory and practice of corporate finance: Evidence from the field’, Journal of Financial Economics, Vol. 60, 2001, pp. 187–243.
17. Green, R., ‘Investment incentives, debt and warrants’, Journal of Financial Economics, Vol. 13, 1984, pp. 115–36.
18. Harris, M. And Raviv A., ‘The theory of capital structure’, Journal of Finance, Vol. 46, no. 1, 1991, pp. 297–355.
19. Hoffmeister, J. R., ‘Use of convertible debt in the early 1970s: A reevaluation of corporate motives’, Quarterly Review of Economics and Business, Vol. 17, 1977, pp. 23–32.
20. Hope, A., Convertibles Zurich, Finanz und Wirtschaft, 2000.
21. Jensen, M., ‘The agency costs of free cash flow, corporate finance and takeovers’, American Economic Review, Vol. 76, 1986, pp. 323–329.
22. Korajczyk, R. A., and McDonaldR. L.LucasD. J., “The Effect of Information Releases on the Pricing and Timing of Equity Issues”, Review of Financial Studies, 4(1991), pp. 685–708.
23. Korkeamaki, T. P., ‘Effects of law on corporate financing practices – international evidence from convertible bond issues’, Working Paper Gonzaga University, 2002.
24. Korkeamaki, T. P. And Moore, W. T., ‘Convertible bond design and capital investment: The role of call provisions’, Working Paper Gonzaga University, University of South Carolina, 2002.
25. La Porta, R., Lopez-De-Silanes, F., Shleifer, A. And Vishny, R. W., ‘Law and finance’, Journal of Political Economy, Vol. 106, 1998, pp. 1113–55.
26. La Porta, R., Lopez-De-Silanes, F., Shleifer, A. And Vishny, R. W., ‘Legal determinants of external finance’, Journal of Finance, Vol. 52, 1997, pp. 1131–52.
27. Lewis, C. M., Rogalski, R. J. And Seward, J. K., ‘Agency problems, information asymmetries and convertible debt security design’, Journal of Financial Intermediation, Vol. 7, 1998a, pp. 32–59.
28. Lewis, C. M., Rogalski, R. J. And Seward, J. K., ‘Understanding the design of convertible debt’, Journal of Applied Corporate Finance, Vol. 11, Spring 1998b, pp. 45–53.
29. Mayers, D., ‘Why firms issue convertible bonds: The matching of financial and real investment options’, Journal of Financial Economics, Vol. 47, 1998, pp. 83–102.
30. Mikkelson, W. And Partch, M., ‘Valuation effects of security offering and the issuance process’, Journal of Financial Economics, Vol. 15, 1986, pp. 31–60.
31. Myers, S. And Majluf, N., ‘Corporate financing and investment decisions when firms have information that investors do not have’, Journal of Financial Economics, Vol. 13, 1984, pp. 187–221.
32. Noddings, T. C., Christoph, S. C. And Noddings, J. G., The International Handbook of Convertibles Chicago: Glenlake, 2001.
33. Pilcher, C. J., Raising capital with convertible securities, Michigan Business Studies no. 21/2 University of Michigan, Ann Arbor, MI., 1955.
34. Stein, J. C., ‘Convertible bonds as backdoor equity financing’, Journal of Financial Economics, Vol. 32, 1992, pp. 3–21.
35. Veld, C., ‘Motives for the issuance of warrant-bond loans by Dutch companies’, Journal of Multinational Financial Management, Vol. 4, 1994, pp. 1–24.