发帖
雷达卡
Recent research suggests firms exploit their knowledge of future returns when conducting their financing activities, implying investors in their securities are experiencing negative riskadjusted returns. Another branch of the literature suggests that investors in private placements earn positive risk-adjusted returns to compensate them for illiquidity, monitoring, and information production. Both hypotheses are potentially relevant to convertible bonds but have different predictions for the empirical patterns in ostissuance returns. This study exploits post-issuance data on convertible bond prices to provide information about which hypothesis is most relevant for convertible bonds. The results indicate convertible bonds are underpriced at issuance and that the excess risk-adjusted returns occur soon after issuance, which are consistent with the private placement literature. Additionally, there is no evidence of subsequent underperformance on a risk-adjusted basis, indicating firms do not issue convertible bonds to
take advantage of market conditions or asymmetric information.
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