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Choice of debt in dual offerings

Devrim Yaman (Assistant Professor, Department of Finance and Commercial Law, Haworth College of Business, Western Michigan University, Kalamazoo, MI 49008, USA)

Management Research News

ISSN: 0140-9174

Article publication date: 1 November 2004

Abstract

In this study we analyze the determinants of the type and structure of debt included in dual offerings of debt and equity. Our sample consists of 54 dual offerings of convertible bond and common stock (CBCS) and 258 dual offerings of straight bond and common stock (SBCS). We find that firms with high asset substitution problems are more likely to issue CBCS offerings instead of SBCS offerings. These firms are also more likely to include convertible bonds with a high probability of conversion in the issue. The probability of CBCS offerings is higher for firms with low information asymmetry and during high interest rate periods. We also find that the announcement returns of CBCS offerings are lower than the returns of SBCS offerings.

Keywords

Citation

Yaman, D. (2004), "Choice of debt in dual offerings", Management Research News, Vol. 27 No. 11/12, pp. 70-93. https://doi.org/10.1108/01409170410784671

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited