A study of underpricing of convertible bonds offerings

• Main Authors: Pin-Ya Wang, 王品雅
• Other Authors: Li-Chiu Chi
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/cebxaa

碩士 === 國立虎尾科技大學 === 經營管理研究所 === 98 === This study focuses on TAIEX-listed and OTC-traded companies that issue convertible bonds and investigates whether four major dimensions, corporate characteristics, bank relationships, reputation of underwriters and macroeconomic conditions, have an impact on the issuance of discount convertible bonds. In the current literature, there have yet to be studies that incorporate the correlation between the underpricing of convertible bonds and bank relationships. Therefore, this study is innovative in its approach to examining the problem from the angle of bank relationships and in investigating its impact on the extent of underpricing. Empirical results indicate that with respect to the corporate characteristic dimension, credit rating are positively correlated with the discount. With respect to bank relationships, the number of correspondent banks and lending strength of the main bank are both significantly negatively correlated with the discount. As for the macroeconomic dimension, market conditions and price level are also exhibit significantly positively correlation with underpricing. In addition, this study investigate whether deliberate underpricing of share prices by insiders prior to the issuance of convertible bonds is a cause of lower conversion prices, thus allowing insiders to subscribe to the issue with lower costs. The results find underpricing exhibit a significantly positively correlation with cumulative abnormal return, the results does not match with this research, don’t support the statement of artificially pressure price by company''s insiders in order to achieve the manipulation of conversion price before price setting date. That indicate to pressure stock price by insiders is limited, can not cumulative stock price decline before the determine conversion price period. The results explain shorten the period of the determine conversion price could limit the insiders to transfer wealth of external shareholder by pressure price down.