An Empirical Analysis of the Choice Among Issuing Straight Debt, Equity, and Equity-linked Debt Securities PDF Download

Author: David McNeil Smith
Publisher:
ISBN:
Category : Convertible bonds
Languages : en
Pages : 314

View

Book Description

Author: Joseph T. Mahoney
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 648

View

Book Description

Author: Thomas J. Chemmanur
Publisher:
ISBN:
Category :
Languages : en
Pages : 54

View

Book Description
Mandatory convertibles, which are equity-linked hybrid securities that automatically convert to equity on a pre-specified date, have become an increasingly popular means of raising capital in recent years (about $20 billion worth issued in 2001 alone). This paper presents the first theoretical and empirical analysis of mandatory convertibles in the literature. We consider a firm facing a financial market characterized by asymmetric information, and significant costs in the event of financial distress. The firm can raise capital either by issuing mandatory convertibles, or by issuing more conventional securities like straight debt, ordinary convertibles, or equity. We show that, in equilibrium, the firm issues straight debt or ordinary convertibles if the extent of asymmetric information facing it is large, but the probability of being in financial distress is relatively small; it issues mandatory convertibles if it faces a smaller extent of asymmetric information but a greater probability of financial distress. Our model provides a rationale for the three commonly observed features of mandatory convertibles: mandatory conversion, capped (or limited) capital appreciation, and a higher dividend yield compared to common stock. We also characterize the equilibrium design of mandatory convertibles. We test the implications of our theory regarding a firm's choice between mandatory and ordinary convertibles and find supporting evidence.

Author: Mukesh Bajaj
Publisher:
ISBN:
Category :
Languages : en
Pages : 25

View

Book Description
U.S. firms commonly use preferred stocks to raise external capital. Yet this hybrid security's issuance costs and offer yields have not been previously examined in a systematic manner. We analyze a sample of 3,042 preferred stock issues by publicly traded U.S. firms between 1980 and 1999. We find that convertible preferred stock, which are riskier than straight preferred stock, entail higher gross spreads and other direct expenses. Gross spreads and issuance cost are influenced by scale, credit rating and industry effects. We also compare yields on preferred stocks to that of various bellwether bond yields (such as the 30-year Treasury and AAA and BBB corporate bonds). Our results strongly supported the conventional tax-based argument that suggests that yields on preferred stocks should be lower than comparable risk corporate bonds.

Author: T. Todd Smith
Publisher: International Monetary Fund
ISBN: 1451848870
Category : Business & Economics
Languages : en
Pages : 88

View

Book Description
This paper surveys markets for corporate debt securities in the major industrial countries and the international markets. The discussion includes a comparison of the sizes of the markets for various products, as well as the key operational, institutional, and legal features of primary and secondary markets. Although there are some signs that debt markets may be emphasized in the future by some countries, it remains true that North American debt markets are the most active and liquid in the world. The international debt markets are, however, growing in importance. The paper also investigates some of the reasons for the underdevelopment of domestic bond markets and the consequences of firms shifting their debt financing needs from banks to securities markets.

Author:
Publisher:
ISBN:
Category : Dissertations, Academic
Languages : en
Pages : 612

View

Book Description
Abstracts of dissertations available on microfilm or as xerographic reproductions.

Author:
Publisher:
ISBN:
Category : Dissertation abstracts
Languages : en
Pages : 760

View

Book Description

Author: Asani Sarkar
Publisher:
ISBN:
Category :
Languages : en
Pages : 688

View

Book Description

Author: Stefano Caselli
Publisher: Springer
ISBN: 3319541242
Category : Business & Economics
Languages : en
Pages : 215

View

Book Description
This book, now in its second edition, provides an in-depth overview of all segments of the structured finance business, with particular reference to market trends, deal characteristics and deal structuring. The goal is to assist readers in gaining a clear understanding of the common features of structured finance transactions. The process of deal structuring for each type of transaction is carefully analyzed, with extensively updated chapters on asset securitization, project finance, structured leasing transactions and leveraged acquisitions. In the new edition, particular attention is paid to novel areas of intervention, such as public–private partnerships and non-performing loans in the resolution of bank restructuring. Although the subject of much criticism, structured finance, when used properly, offers an effective solution to the credit crunch that many European countries are suffering and is also a way to revive a single capital market for debt instruments. Readers will find this book to be an illuminating guide to the business and to the best market practices in organizing transactions. It will be of value for BSc and MSc finance students, professionals and consultants alike.

Author: Ronald W. Masulis
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 168

View

Book Description