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| Tekijä: | Mayers, D. |
| Otsikko: | Why firms issue convertible bonds: the matching of financial and real investment options. |
| Lehti: | Journal of Financial Economics
1998 : JAN, VOL. 47:1, p. 83-102 |
| Asiasana: | BONDS INVESTMENTS CAPITAL EXPENDITURE FINANCING |
| Kieli: | eng |
| Tiivistelmä: | The paper contends that corporations use callable, convertible bonds to lower the issuance costs of sequential financing. Sequential finacing increases issue costs but helps control overinvestment incentives that can arise if financing is provided prior to an investment option's maturity. A convertible bond's conversion option reduces issue costs while helping to control the overinvestment incentive. Evidence of important investment and financing activity around the time convertible bonds are called and converted supports the hypothesis. The evidence shows significant increases in capital expenditure and new long- term debt financing starting in the year of the call. |
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