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Short sales, price pressure, and the stock price response to convertible bond calls

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  • Bechmann, Ken L.

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  • Bechmann, Ken L., 2004. "Short sales, price pressure, and the stock price response to convertible bond calls," Journal of Financial Markets, Elsevier, vol. 7(4), pages 427-451, October.
    • Handle: RePEc:eee:finmar:v:7:y:2004:i:4:p:427-451
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    1. Fama, Eugene F., 1998. "Market efficiency, long-term returns, and behavioral finance," Journal of Financial Economics, Elsevier, vol. 49(3), pages 283-306, September.
    2. Mikkelson, Wayne H., 1981. "Convertible calls and security returns," Journal of Financial Economics, Elsevier, vol. 9(3), pages 237-264, September.
    3. Robert S. Hansen, 1988. "The Demise of the Rights Issue," Review of Financial Studies, Society for Financial Studies, vol. 1(3), pages 289-309.
    4. Singh, Ajai K. & Cowan, Arnold R. & Nayar, Nandkumar, 1991. "Underwritten calls of convertible bonds," Journal of Financial Economics, Elsevier, vol. 29(1), pages 173-196, March.
    5. Singh, Ajai K., 1997. "Layoffs and underwritten rights offers," Journal of Financial Economics, Elsevier, vol. 43(1), pages 105-130, January.
    6. John S. Howe & Ji-Chai Lin & Ajai K. Singh, 1998. "Clientele Effects and Cross-Security Market Making: Evidence from Calls of Convertible Preferred Securities," Financial Management, Financial Management Association, vol. 27(4), Winter.
    7. Byrd, Anthony K & Moore, William T, 1996. "On the Information Content of Calls of Convertible Securities," The Journal of Business, University of Chicago Press, vol. 69(1), pages 89-101, January.
    8. D'Mello, Ranjan & Ferris, Stephen P. & Hwang, Chuan Yang, 2003. "The tax-loss selling hypothesis, market liquidity, and price pressure around the turn-of-the-year," Journal of Financial Markets, Elsevier, vol. 6(1), pages 73-98, January.
    9. Aditya Kaul & Vikas Mehrotra & Randall Morck, 2000. "Demand Curves for Stocks Do Slope Down: New Evidence from an Index Weights Adjustment," Journal of Finance, American Finance Association, vol. 55(2), pages 893-912, April.
    10. Mazzeo, Michael A & Moore, William T, 1992. "Liquidity Costs and Stock Price Response to Convertible Security Calls," The Journal of Business, University of Chicago Press, vol. 65(3), pages 353-369, July.
    11. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    12. Kraus, Alan & Stoll, Hans R, 1972. "Price Impacts of Block Trading on the New York Stock Exchange," Journal of Finance, American Finance Association, vol. 27(3), pages 569-588, June.
    13. Louis H. Ederington & Gary L. Caton & Cynthia J. Campbell, 1997. "To Call or Not To Call Convertible Debt," Financial Management, Financial Management Association, vol. 26(1), Spring.
    14. Ederington, Louis H & Goh, Jeremy C, 2001. "Is a Convertible Bond Call Really Bad News?," The Journal of Business, University of Chicago Press, vol. 74(3), pages 459-476, July.
    15. Shleifer, Andrei, 1986. "Do Demand Curves for Stocks Slope Down?," Journal of Finance, American Finance Association, vol. 41(3), pages 579-590, July.
    16. Mikkelson, Wayne H. & Partch, M. Megan, 1988. "Withdrawn Security Offerings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 23(2), pages 119-133, June.
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    Cited by:

    1. Ammann, Manuel & Kind, Axel & Seiz, Ralf, 2010. "What drives the performance of convertible-bond funds?," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2600-2613, November.
    2. Petri Jylhä & Kalle Rinne & Matti Suominen, 2014. "Do Hedge Funds Supply or Demand Liquidity?," Review of Finance, European Finance Association, vol. 18(4), pages 1259-1298.
    3. Duca, Eric & Dutordoir, Marie & Veld, Chris & Verwijmeren, Patrick, 2012. "Why are convertible bond announcements associated with increasingly negative issuer stock returns? An arbitrage-based explanation," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 2884-2899.
    4. de Jong, Abe & Dutordoir, Marie & Verwijmeren, Patrick, 2011. "Why do convertible issuers simultaneously repurchase stock? An arbitrage-based explanation," Journal of Financial Economics, Elsevier, vol. 100(1), pages 113-129, April.
    5. Choi, Darwin & Getmansky, Mila & Tookes, Heather, 2009. "Convertible bond arbitrage, liquidity externalities, and stock prices," Journal of Financial Economics, Elsevier, vol. 91(2), pages 227-251, February.
    6. Tobias Nigbur, 2015. "Calls of convertible debt securities: no bad news at all," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 29(1), pages 61-79, February.
    7. repec:bla:finmgt:v:36:y:2007:i:2:p:1-21:1 is not listed on IDEAS
    8. Karen Benson & Martina K. Linnenluecke & David Morrison & Sviatoslav Rosov, 2020. "Death spiral PIPEs: a reconsideration of the evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 4175-4194, December.
    9. Grundy, Bruce D. & Veld, Chris & Verwijmeren, Patrick & Zabolotnyuk, Yuriy, 2014. "Why are conversion-forcing call announcements associated with negative wealth effects?," Journal of Corporate Finance, Elsevier, vol. 24(C), pages 149-157.
    10. Hackney, John & Henry, Tyler R. & Koski, Jennifer L., 2020. "Arbitrage vs. informed short selling: Evidence from convertible bond issuers," Journal of Corporate Finance, Elsevier, vol. 65(C).
    11. Benjamin Kleidt & Eckhard Scharmer & Dirk Schiereck, 2009. "Desinvestitionen von Aktienpaketen — Eine Analyse von Exchangeable Bonds," Schmalenbach Journal of Business Research, Springer, vol. 61(7), pages 738-780, November.
    12. Choi, Darwin, 2019. "Disposition sales and stock market liquidity," Journal of Financial Markets, Elsevier, vol. 45(C), pages 19-36.
    13. Omar, Ayishat & Tang, Alex P., 2019. "Earnings management and convertible preferred stock calls," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 423-433.
    14. Bechmann, Ken L. & Lunde, Asger & Zebedee, Allan A., 2014. "In- and out-of-the-money convertible bond calls: Signaling or price pressure?," Journal of Corporate Finance, Elsevier, vol. 24(C), pages 135-148.
    15. Wen Shiung Lee & Ya Ting Yang, 2013. "Valuation and choice of convertible bonds based on MCDM," Applied Financial Economics, Taylor & Francis Journals, vol. 23(10), pages 861-868, May.

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