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Equity valuation effects of the issuance of convertible bonds: UK evidence

Equity valuation effects of the issuance of convertible bonds: UK evidence
Equity valuation effects of the issuance of convertible bonds: UK evidence
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.
1059-8596
7-18
Gwilym, Owain Ap
9639163d-b537-42e2-ab28-7aaf56d61185
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Daliakopolous, Stavros
ab9561a0-64e4-4b8d-a453-578e26c8bc71
Gwilym, Owain Ap
9639163d-b537-42e2-ab28-7aaf56d61185
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Daliakopolous, Stavros
ab9561a0-64e4-4b8d-a453-578e26c8bc71

Gwilym, Owain Ap, Wolfe, Simon and Daliakopolous, Stavros (1999) Equity valuation effects of the issuance of convertible bonds: UK evidence. The Journal of Fixed Income, 9 (4), 7-18.

Record type: Article

Abstract

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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More information

Published date: December 1999

Identifiers

Local EPrints ID: 36591
URI: http://eprints.soton.ac.uk/id/eprint/36591
ISSN: 1059-8596
PURE UUID: 5d1fc0c9-a16b-4363-beff-307ba117c8ca
ORCID for Simon Wolfe: ORCID iD orcid.org/0000-0001-9815-9535

Catalogue record

Date deposited: 15 Mar 2007
Last modified: 07 Oct 2020 01:36

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Contributors

Author: Owain Ap Gwilym
Author: Simon Wolfe ORCID iD
Author: Stavros Daliakopolous

University divisions

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