Announcement effects of convertible bond loans versus warrant-bond loans

An empirical analysis for the Dutch market

F.A. de Roon, C.H. Veld

Research output: Working paperDiscussion paperOther research output

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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.
Original languageEnglish
PublisherUnknown Publisher
Number of pages14
Volume1995-9
Publication statusPublished - 1995

Publication series

NameCentER Discussion Paper
Volume1995-9

Fingerprint

Loans
Announcement effect
Convertible bonds
Warrants
Empirical analysis
Announcement
Abnormal returns
Event study methodology
Equity
Stock prices
Debt
News
Shareholders
Regression analysis

Keywords

  • Bond Markets
  • Convertible Bonds
  • finance

Cite this

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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.",
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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.

Unknown Publisher, 1995. (CentER Discussion Paper; Vol. 1995-9).

Research output: Working paperDiscussion paperOther research output

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