| Author: | Janjigian, V. |
| Title: | The leverage changing consequences of convertible debt financing. |
| Journal: | Financial Management
1987 : AUTUMN, VOL. 16:3, p. 15-21 |
| Index terms: | DEBT FINANCING CAPITAL STRUCTURE OF COMPANIES SHAREHOLDERS BONDS |
| Language: | eng |
| Abstract: | Recent evidence shows that common stockholders realize significantly negativ abnormal returns upon the announcement of convertible debt financing. The leverage hypthesis predicts positive announcement date abnormal returns in reaction to leverage increasing capital structure changes. In this paper the frequently made assumption that convertible debt increases financial leverage is questioned and its actual effect on leverage is estimated. It is shown that convertible bonds have a significantly large equity component. |
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