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Why do Companies issue Convertible Bond Loans? An Empirical Analysis for the Canadian Market

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  • Loncarski, I.
  • Horst, J.R. ter
  • Veld, C.H.

    (Tilburg University, Center for Economic Research)

Abstract

We examine the wealth effects associated with the announcements of convertible debt offerings in the Canadian market for the period between 1991 and 2004.The average wealth effect for the three day event window is a significantly negative -2.7%.This result is in line with previous studies on other Anglo-Saxon markets, but it is different from other markets where generally no effect or even a positive effect is found.In addition, support is found for the negative effect of both debt- and equity-related agency costs.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2006-65.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:200665

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Keywords: Event study; convertible bonds; wealth effects; agency costs;

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Cited by:
  1. Loncarski, I. & Horst, J.R. ter & Veld, C.H., 2006. "The Convertible Arbitrage Strategy Analyzed," Discussion Paper 2006-98, Tilburg University, Center for Economic Research.
  2. Dutordoir, M.D.R.P. & van de Gucht, L., 2006. "Are There Windows of Opportunity for Convertible Debt Issuance? Evidence for Western Europe," ERIM Report Series Research in Management ERS-2006-055-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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