Do Convertible Bond Issuers Cater to Investor Demand?

• Autores: Abe de Jong, Eric Duca, Marie Dutordoir
• Localización: Financial management, ISSN 0046-3892, Vol. 42, Nº 1, 2013, págs. 41-78
• Idioma: inglés
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• Resumen

  • 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.