LI, H., LIU, H. and SIGANOS, A., 2014. A comparison of the stock market reactions of convertible bond offerings between financial and non-financial institutions: do they differ?. International Review of Financial Analysis. Available online 24 June 2014, doi:10.1016/j.irfa.2014.06.004
We focus on the stock price reaction to convertible bond offering made by financial institutions and find that the
cumulative abnormal return over the three day interval around convertible bond issuance is 1.41 percentage
higher than that for non-financial institutions. This result supports our hypothesis that since financials are heavily
regulated, the market is less likely to assume that the issuance of convertible bond by financials signals information
that are overvalued. Our results remain robust after controlling for a number of firm-, issue-, and marketspecific
characteristics as well as the level of short selling pressure induced by convertible bond arbitrageurs.