Why firms issue convertible bonds: the matching of financial and real investment options

• 成果类型: Article
• 署名作者: Mayers, D
• 署名单位: University of California System; University of California Riverside
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(97)00038-X
• 发表日期: 1998
• 页码: 83-102
• 关键词: convertible bond; Sequential financing; investment option

摘要

This paper contends that corporations use callable, convertible bonds to lower the issuance costs of sequential financing. Sequential financing 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 expenditures and new long-term debt financing starting in the year of the call. (C) 1998 Elsevier Science S.A. All rights reserved.