| Imprint: |
Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa 2008 |
| Description: |
54 p. |
| Abstract: |
We examine why firms combine convertible debt offerings with stock repurchases. In 2006, 33% of the convertible issuers in the US simultaneously repurchased stock. These combined transactions are inconsistent with traditional motivations for convertible issuance. We document that convertible arbitrage drives these stock repurchases. Convertible debt arbitrageurs simultaneously buy convertibles and short sell the issuer's common stock, resulting in downward pressure on the stock price. To prevent such short-selling activity, firms repurchase their stock directly from arbitrageurs. We show that combined transactions exhibit lower short-selling activity and that convertible arbitrage explains both the size and speed of the stock repurchases. |
| Rights: |
Aquest document està subjecte a una llicència d'ús de Creative Commons, amb la qual es permet copiar, distribuir i comunicar públicament l'obra sempre que se'n citin l'autor original, la universitat i el departament i no se'n faci cap ús comercial ni obra derivada, tal com queda estipulat en la llicència d'ús  |
| Language: |
Anglès |
| Series: |
Departament d'Economia de l'Empresa. Documents de treball |
| Series: |
Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa) ; 08/2 |
| Document: |
Working paper |
| Subject: |
Estocs |
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