Next Article in Journal
Creating a Green Chemistry Lab: Towards Sustainable Resource Management and Responsible Purchasing
Next Article in Special Issue
Erratum: Villegas-Ch, W., et al. A Business Intelligence Framework for Analyzing Educational Data. Sustainability 2020, 12, 5745
Previous Article in Journal
Assessing Urban Resilience in Complex and Dynamic Systems: The RESCCUE Project Approach in Lisbon Research Site
Previous Article in Special Issue
Using Patent Technology Networks to Observe Neurocomputing Technology Hotspots and Development Trends
Open AccessArticle

Announcement Effects of Convertible and Warrant Bond Issues with Embedded Refixing Option: Evidence from Korea

Securities·Derivatives R & D Center, Korea Exchange, 76 Yeouinaru-ro, Yeongdeungpo-gu, Seoul 07329, Korea
Sustainability 2020, 12(21), 8933; https://doi.org/10.3390/su12218933
Received: 16 September 2020 / Revised: 21 October 2020 / Accepted: 23 October 2020 / Published: 27 October 2020
(This article belongs to the Special Issue Business Analytics and Data Mining for Business Sustainability)
This study examines the announcement effects of convertible and warrant bond issues with embedded refixing option in Korea from January 2001 to December 2018. Refixing option denotes an adjustment right of the conversion price embedded in equity-linked debt when the underlying stock price falls under conversion price. I find statistically significant declines of 2.6 to 2.7 percentage points in cumulative abnormal returns for the inclusion of a refixing clause and especially further declines of 6.2 to 6.3 percentage points during the period from 2016 to 2018. This result implies that the market’s concerns about the dilution of existing shareholder value due to the exercise of the refixing rights are reflected in the market response. I further find that the degree of negative market response varies according to the changes in macroeconomic conditions and the stock exchange on which the issuing firms are listed. The findings are robust after controlling for the effect of firm-, issue-, and market-specific characteristics. View Full-Text
Keywords: convertible bond; bond with warrant; refixing option; equity-linked debt convertible bond; bond with warrant; refixing option; equity-linked debt
Show Figures

Figure 1

MDPI and ACS Style

Kim, Y. Announcement Effects of Convertible and Warrant Bond Issues with Embedded Refixing Option: Evidence from Korea. Sustainability 2020, 12, 8933. https://doi.org/10.3390/su12218933

AMA Style

Kim Y. Announcement Effects of Convertible and Warrant Bond Issues with Embedded Refixing Option: Evidence from Korea. Sustainability. 2020; 12(21):8933. https://doi.org/10.3390/su12218933

Chicago/Turabian Style

Kim, Yongsik. 2020. "Announcement Effects of Convertible and Warrant Bond Issues with Embedded Refixing Option: Evidence from Korea" Sustainability 12, no. 21: 8933. https://doi.org/10.3390/su12218933

Find Other Styles
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Article Access Map by Country/Region

1
Search more from Scilit
 
Search
Back to TopTop