Does corporate governance influence convertible bond issuance?

Marie Dutordoir, Norman Strong, Marius C. Ziegan

Research output: Contribution to journalArticlepeer-review


We examine the influence of corporate governance quality on firms' choice between convertible debt, straight debt, and equity using a Western European sample of security offerings made between 2000 and 2010. We find that weaker firm-specific and country-specific corporate governance quality increases firms' likelihood of issuing convertible debt instead of straight debt and common equity. We also find that stockholder reactions to convertible debt announcements are more favorable for firms with weaker corporate governance. Our results suggest that corporate governance quality is a significant security choice determinant, with firms using convertible debt as a substitute for high quality governance mechanisms.
Original languageEnglish
Pages (from-to)80-100
Number of pages21
JournalJournal of Corporate Finance
Publication statusPublished - 1 Feb 2014


  • Convertible debt
  • Corporate governance
  • Security choice


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