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Private placements of convertible securities: stock returns, operating performance and abnormal accruals

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  • Jan L. Williams
  • Alex P. Tang

Abstract

This study examines long-run stock returns, operating performance and abnormal accruals of private placements of convertible securities. We investigate the effects surrounding private placements to test and differentiate the implications of several competing hypotheses. While the monitoring and certification hypotheses suggest positive effects, the managerial entrenchment, overvaluation and windows-of-opportunity hypotheses suggest the opposite. We find that placing firms generally experience positive effects in the pre-periods and negative effects in the post-periods. Our overall findings are more consistent with the predictions of the overvaluation and windows-of-opportunity hypotheses while our post-placement evidence is also consistent with the predictions of the managerial entrenchment hypothesis. Copyright (c) The Authors. Journal compilation (c) 2009 AFAANZ.

Suggested Citation

  • Jan L. Williams & Alex P. Tang, 2009. "Private placements of convertible securities: stock returns, operating performance and abnormal accruals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 873-899.
  • Handle: RePEc:bla:acctfi:v:49:y:2009:i:4:p:873-899
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    Cited by:

    1. Paul-Olivier KLEIN & Laurent WEILL & Christophe J. GODLEWSKI, 2015. "How Sukuk Shapes Firm Performance," Working Papers of LaRGE Research Center 2015-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    2. repec:bla:acctfi:v:56:y:2016:i:4:p:1149-1185 is not listed on IDEAS

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