Convertible Bond Offering and Institutional Factors - the International Evidence

• Main Authors: Chen-Yu Lin, 林丞宇
• Other Authors: Sheng-Syan Chen
• Format: Others
• Language: en_US
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/64352331345200947947

碩士 === 國立臺灣大學 === 財務金融學研究所 === 94 === We study the institutional factors of financial markets development, macroeconomic conditions, and investor rights protection which affect convertible bond (CB) offering by using the panel regression approach with international firm-level data. The results suggest that the stock market development and the size of the bank sector reduce information costs and then lower the motivation of convertible bond offering. However, an over-sized deposit economy may weaken the bank’s monitoring and need additional convertible bonds as complements to control the possible asset substitution problem. The economic growth rates and interest rate levels are negatively related to convertible bond offering while inflation has a positive relation with convertible bond offering. Additionally, both shareholder and creditor rights protection have positive effect on convertible bond offering. The empirical evidence of institutional effects supports the fact that convertible bonds can control agency problems, information asymmetry, financial distress costs, and lower costs of capital. We also notice that the explanatory power of institutional factors is stronger for developed countries than for emerging countries.