Convertible Debt Issuance and Market Completeness

Autor:	John B. Broughton, David M. Smith
Rok vydání:	1996
Předmět:	Warrant Economics and Econometrics Convertible arbitrage Shareholder Financial economics Convertible Economics Equity (finance) Call option Convertible bond Futures contract Finance
Zdroj:	The Financial Review. 31:623-640
ISSN:	1540-6288 0732-8516
DOI:	10.1111/j.1540-6288.1996.tb00890.x
Popis:	Recent empirical evidence on option listings supports the notion that equity options help to span the market. This paper investigates the role of convertible debt in market completion. To the extent that the warrant portion of convertible instruments is similar to a call option, the securities can provide payoffs in states of nature that were previously unspanned. Stockholders of firms without listed options or pre-existing warrant-related securities suffer less severe wealth declines around convertible offerings than do owners of firms with contingent claims on their stock. The results suggest that, particularly before the rise of options on index futures, convertible debt played a market-spanning role similar to that of equity options.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::476a4315c0e906c0dc62125185f3f7c9 https://doi.org/10.1111/j.1540-6288.1996.tb00890.x Zobrazit plný text záznamu Plný text ve formátu PDF Plný text ve formátu HTML
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