Convertible bond announcement effects

Why is Japan different?

Marie Dutordoir, Hui Li, Frank Hong Liu, Patrick Verwijmeren (Corresponding Author)

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

U.S. and Japanese firms dominate global convertible bond issuance. Previous research documents more favorable convertible bond announcement effects in Japan than in the U.S. and other developed countries. Using a global sample of convertible bonds issued from 1982 to 2012, we find that the more favorable announcement effects of Japanese convertibles are driven by their stated uses of proceeds. Japanese convertibles more often include capital expenditure as an intended use, while U.S. firms tend to mention general purposes to motivate their offering. Our findings illustrate the value to firms of being more explicit when disclosing the intended use of proceeds of security offerings.
Original languageEnglish
Pages (from-to)76-92
Number of pages17
JournalJournal of Corporate Finance
Volume37
Early online date22 Dec 2015
DOIs
Publication statusPublished - Apr 2016

Fingerprint

Announcement effect
Japan
Convertible bonds
Japanese firms
Capital expenditures
Developed countries

Keywords

  • convertible bonds
  • capital expenditure
  • disclosure standards
  • Japan
  • stated use of proceeds

Cite this

Convertible bond announcement effects : Why is Japan different? / Dutordoir, Marie ; Li, Hui; Liu, Frank Hong; Verwijmeren, Patrick (Corresponding Author).

In: Journal of Corporate Finance, Vol. 37, 04.2016, p. 76-92.

Research output: Contribution to journalArticle

Dutordoir, Marie ; Li, Hui ; Liu, Frank Hong ; Verwijmeren, Patrick. / Convertible bond announcement effects : Why is Japan different?. In: Journal of Corporate Finance. 2016 ; Vol. 37. pp. 76-92.
@article{f844b0b21671450a986d6eef0bd9cf6c,
title = "Convertible bond announcement effects: Why is Japan different?",
abstract = "U.S. and Japanese firms dominate global convertible bond issuance. Previous research documents more favorable convertible bond announcement effects in Japan than in the U.S. and other developed countries. Using a global sample of convertible bonds issued from 1982 to 2012, we find that the more favorable announcement effects of Japanese convertibles are driven by their stated uses of proceeds. Japanese convertibles more often include capital expenditure as an intended use, while U.S. firms tend to mention general purposes to motivate their offering. Our findings illustrate the value to firms of being more explicit when disclosing the intended use of proceeds of security offerings.",
keywords = "convertible bonds, capital expenditure, disclosure standards, Japan, stated use of proceeds",
author = "Marie Dutordoir and Hui Li and Liu, {Frank Hong} and Patrick Verwijmeren",
note = "We would like to thank an anonymous referee, Craig Lewis, Yoichi Otsubo, Jay Ritter, Norman Strong, and Chris Veld, as well as the participants at the Asset Pricing and Corporate Finance Workshop at the University of Glasgow in 2013 and the World Finance Conference at Buenos Aires in 2015, for their very helpful comments and suggestions. We would also like to thank Hamza Ghaffar and Mats van Marle for providing excellent research assistance.",
year = "2016",
month = "4",
doi = "10.1016/j.jcorpfin.2015.12.006",
language = "English",
volume = "37",
pages = "76--92",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",

}

TY - JOUR

T1 - Convertible bond announcement effects

T2 - Why is Japan different?

AU - Dutordoir, Marie

AU - Li, Hui

AU - Liu, Frank Hong

AU - Verwijmeren, Patrick

N1 - We would like to thank an anonymous referee, Craig Lewis, Yoichi Otsubo, Jay Ritter, Norman Strong, and Chris Veld, as well as the participants at the Asset Pricing and Corporate Finance Workshop at the University of Glasgow in 2013 and the World Finance Conference at Buenos Aires in 2015, for their very helpful comments and suggestions. We would also like to thank Hamza Ghaffar and Mats van Marle for providing excellent research assistance.

PY - 2016/4

Y1 - 2016/4

N2 - U.S. and Japanese firms dominate global convertible bond issuance. Previous research documents more favorable convertible bond announcement effects in Japan than in the U.S. and other developed countries. Using a global sample of convertible bonds issued from 1982 to 2012, we find that the more favorable announcement effects of Japanese convertibles are driven by their stated uses of proceeds. Japanese convertibles more often include capital expenditure as an intended use, while U.S. firms tend to mention general purposes to motivate their offering. Our findings illustrate the value to firms of being more explicit when disclosing the intended use of proceeds of security offerings.

AB - U.S. and Japanese firms dominate global convertible bond issuance. Previous research documents more favorable convertible bond announcement effects in Japan than in the U.S. and other developed countries. Using a global sample of convertible bonds issued from 1982 to 2012, we find that the more favorable announcement effects of Japanese convertibles are driven by their stated uses of proceeds. Japanese convertibles more often include capital expenditure as an intended use, while U.S. firms tend to mention general purposes to motivate their offering. Our findings illustrate the value to firms of being more explicit when disclosing the intended use of proceeds of security offerings.

KW - convertible bonds

KW - capital expenditure

KW - disclosure standards

KW - Japan

KW - stated use of proceeds

U2 - 10.1016/j.jcorpfin.2015.12.006

DO - 10.1016/j.jcorpfin.2015.12.006

M3 - Article

VL - 37

SP - 76

EP - 92

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

ER -