Convertible Bond Design And Capital Investment : The Role of Call Provisions  

Oleh:

Korkeamaki, Timo P. ; Moore, William T.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 59 no. 1 (Feb. 2004), page 391-406.
Topik: investment; put & call options; convertible bonds; investment policy; correlation analysis; studies; hypotheses
Fulltext: p 391.pdf (95.75KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

The relations between the strength and length of call protection and firms' subsequent investment behavior are investigated. It is argued that firms facing investment options that are expected to mature shortly after issuance will offer convertibles with little or no call protection, and those issues with protection features will have short protection periods. To evaluate investment patterns, issuers' capital expenditures are examined for each of the 5 years following issuance. The primary measure of capital investment behavior reflects the number of years following issuance it takes for firms' cumulative capital expenditures to meet or exceed the proceeds raised at issuance. One test involves estimation of an ordered probit model of the strength of call protection. Then the length of the contractual call protection period is examined by estimating a Poisson regression model of the number of years of protection.

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