Why firms issue convertible bonds: the matching of financial and real investment options
Article Abstract:
Convertible bonds are used by companies to resolve problems associated with sequential-financing. The option part of convertible bonds tends to limit overinvestment incentive and serves as a hedge against costs related with future capital increase. Its call provision, meanwhile, is proved to be useful in dealing with uncertainty associated with real option's maturity date. It also permits companies to continue their financing plan that is not affected by the debt issue.
Publication Name: Journal of Financial Economics
Subject: Economics
ISSN: 0304-405X
Year: 1998
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Guaranty funds and risk-taking: evidence from the insurance industry
Article Abstract:
Property-liability insurers showed a propensity to shift their asset portfolios to stocks instead of bonds in cases of guaranty-fund enactments. This action is correlated with the risk-subsidy hypothesis where the structure of guaranty-funds provides rewards for risk-taking in an insurer's investment activities. Guaranty-fund enactments serve as a form of secure environment since the incentives are concentrated in a single region.
Publication Name: Journal of Financial Economics
Subject: Economics
ISSN: 0304-405X
Year: 1997
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Manegerial vote ownership and shareholder wealth: evidence from employee stock ownership plans
Article Abstract:
An investigation of employee stock ownership plan (ESOP) announcements led to the conclusion that shareholders benefit when managers control up to 20% of the shares, but lose out when managers control less than 10% or more than 20% of the shares.
Publication Name: Journal of Financial Economics
Subject: Economics
ISSN: 0304-405X
Year: 1992
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