A Re-examination of Shareholder Wealth Effects of Calls of Convertible Preferred Stock
AbstractCommon stock price reactions to announcements of sixty-seven calls of the in-the-money convertible preferred stocks are examined, and a significant average abnormal return of -1.6 percent is documented. The finding is robust to the choice of estimation period and the assumed return-generating process. Annual dividend obligations for the called preferred issues in the sample typically are greater than the dividends for the common shares into which they are converted, and announcement-period abnormal returns are negatively correlated with changes in dividends. Moreover, calls that result in dilution of voting rights appear to have greater adverse valuation effects than calls that do not alter voting rights concentration. Copyright 1989 by American Finance Association.
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Bibliographic InfoArticle provided by American Finance Association in its journal Journal of Finance.
Volume (Year): 44 (1989)
Issue (Month): 5 (December)
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- Chang, Saeyoung & Puthenpurackal, John, 2014. "Repurchases of convertible preferred stock and shareholder wealth," Journal of Business Research, Elsevier, vol. 67(4), pages 623-630.
- Tseng-Chung Tang, 2010. "The information content of reorganization procedures: contagion or competitive effects?," Portuguese Economic Journal, Springer, vol. 9(2), pages 141-161, August.
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