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Some New Evidence On Why Companies Use Convertible Bonds

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Author Info
Frank C. Jen
Dosoung Choi
Seong-Hyo Lee
Abstract

The popular argument for convertibles holds that they provide issuers with "cheap" debt and allow them to sell equity at a premium over current value. Objecting to the "free lunch" implied by such an argument, financial economists have offered other explanations that show how the combination of debt and equity built into convertibles can serve to reduce information and agency costs faced by companies and their investors. 1997 Morgan Stanley.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1745-6622.1997.tb00124.x
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Publisher Info
Article provided by Morgan Stanley in its journal Journal of Applied Corporate Finance.

Volume (Year): 10 (1997)
Issue (Month): 1 ()
Pages: 44-53
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Handle: RePEc:bla:jacrfn:v:10:y:1997:i:1:p:44-53

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  1. Wolfgang Drobetz & Matthias C. Grüninger & Claudia B. Wöhle, 2006. "Warum begeben Unternehmen Wandelanleihen?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(III), pages 331-365, September. [Downloadable!]
  2. Loncarski, Igor & Horst, Jenke ter & Veld, Chris, 2006. "Why do companies issue convertible bond loans? : an empirical analysis for the Canadian market," Discussion Paper 65, Tilburg University, Center for Economic Research. [Downloadable!]
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