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Announcement effects of convertible bond loans versus warrant-bond loans: An empirical analysis for the Dutch market
de Roon,F.A. Veld,C.H.
de Roon,F.A.
Veld,C.H.
Abstract
This study investigates the announcement effects of offerings of convertible bond loans and warrant-bond loans using data for the Dutch market. Using standard event study methodology it is found that on average stock prices show a positive but insignificant abnormal return for the announcement of a convertible bond loan and a significant positive abnormal return for the announcement of a warrant-bond loan. These findings contrast with studies for the United States which generally find significant negative abnormal returns for convertible bond loans and negative but no significant abnormal returns for warrant-bond loans. This can be explained by the fact that Dutch companies generally package these announcements with other (good) firm specific news. Using regression analysis, in which the amount of new equity and new debt involved in the issue are taken into account, it is found that shareholders react more positively to the announcement of warrant-bond loans than to the announcement of convertible bond loans.
Description
Pagination: 14
Date
1995
Journal Title
Journal ISSN
Volume Title
Publisher
Unknown Publisher
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9.pdf
Adobe PDF, 61.51 KB
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Organizational Units
Journal Issue
Keywords
Bond Markets, Convertible Bonds, finance
Citation
de Roon, F A & Veld, C H 1995 'Announcement effects of convertible bond loans versus warrant-bond loans : An empirical analysis for the Dutch market' CentER Discussion Paper, vol. 1995-9, Unknown Publisher.