Gwilym, Owain Ap, Wolfe, Simon and Daliakopolous, Stavros
Equity valuation effects of the issuance of convertible bonds: UK evidence
The Journal of Fixed Income, 9, (4), .
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The article compares the equity valuation effects of the convertible bonds, straight debt, and common equity offerings in the U.K. market. Our results on announcement dates are similar to those of studies in the U.S. in several respects. Convertible bond offerings have a significant negative impact on the underlying stock price; straight debt offerings are accompanied by a small negative stock price reaction; and rights issues have significantly negative valuation effects. A result that is at variance with U.S. results is that we find no stock price reaction on the issue date of convertible bonds.
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