The buyers' perspective on security design: Hedge funds and convertible bond call provisions

• 成果类型: Article
• 署名作者: Grundy, Bruce D.; Verwijmeren, Patrick
• 署名单位: University of Melbourne; Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.11.003
• 发表日期: 2018
• 页码: 77-93
• 关键词: Security design; Supply of capital; Call provisions; Convertibles; Hedge funds

摘要

We provide evidence that security design reflects the interplay of capital supplier and security issuer preferences. While call provisions have historically been the default option in convertible security design, only a minority of post-2005 issues are callable. Because hedge funds dominate the market for new convertibles today and because convertible arbitrage is less risky without callability, the recent diminution in the frequency of call provisions in new convertible bond issues illustrates the importance of the preferences of the suppliers of capital in security design. (C) 2017 Elsevier B.V. All rights reserved.