Convertible bond design and capital investment: The role of call provisions

• 成果类型: Article
• 署名作者: Korkeamaki, TP; Moore, WT
• 署名单位: Gonzaga University; University of South Carolina System; University of South Carolina Columbia
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2004.00636.x
• 发表日期: 2004
• 页码: 391-405
• 关键词: agency costs; debt; OPPORTUNITIES; MARKET; FIRMS

摘要

If firms issue convertible securities to facilitate sequential investment, the securities should be engineered to give sufficient flexibility to accommodate timing of follow-on investment. We examine call provisions in convertible bonds and argue that firms with investment options expected to expire sooner (later) will offer weaker (stronger) call protection. We find that issues with weak or no call protection are offered by firms that invest greater amounts soon after issuance than those issuing convertibles with strong protection. Moreover, capital expenditure levels during the 5-year period following issuance are inversely related to the length of call-protection periods.