Do Convertible Bond Issuers Cater to Investor Demand?

Abe De Jong, Eric Duca, Marie Dutordoir

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the impact of fluctuations in investor demand for convertible securities on convertible bond issue volumes, pricing, and design. We find evidence of a positive impact of investor demand proxies on convertible bond issue volumes. We also document significantly lower convertible bond underpricing in periods with higher investor demand. The results hold in a variety of specifications, and are robust to controlling for firm-specific and macroeconomic financing cost proxies. However, we obtain only limited evidence that issuers adjust the design of their convertible bond offerings in response to investor demand. © 2012 Financial Management Association International.
Original languageEnglish
Pages (from-to)41-78
Number of pages37
JournalFinancial Management
Volume42
Issue number1
DOIs
Publication statusPublished - Mar 2013

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