Do Convertible Bond Issuers Cater to Investor Demand?

Abe De Jong, Eric Duca, Marie Dutordoir

Research output: Contribution to journalArticleResearchpeer-review

15 Citations (Scopus)

Abstract

We examine the impact of fluctuations in investor demand for convertible securities on convertible bond issue volumes, pricing, and design. We find evidence of a positive impact of investor demand proxies on convertible bond issue volumes. We also document significantly lower convertible bond underpricing in periods with higher investor demand. The results hold in a variety of specifications, and are robust to controlling for firm-specific and macroeconomic financing cost proxies. However, we obtain only limited evidence that issuers adjust the design of their convertible bond offerings in response to investor demand.

Original languageEnglish
Pages (from-to)41-78
Number of pages38
JournalFinancial Management
Volume42
Issue number1
DOIs
Publication statusPublished - Mar 2013
Externally publishedYes

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