An analysis of the wealth effects of japanese offshore dollar-denominated convertible and warrant bond issues
Stulz, Rene M.
Date of Issue1995
College of Business (Nanyang Business School)
Offshore dollar-denominated equity-linked issues were a more important source of funds for Japanese companies during the 1980s than domestic equity and straight debt issues combined. Using a sample of Japanese equity-linked offshore issues from 1977 to 1989, we find that the announcement of these issues is accompanied by a significant positive abnormal return. This contrasts with evidence that U.S. equity-linked issues have a significant negative stock price reaction. We provide an explanation for the difference in stock price reactions between U.S. and Japanese issues that is based on the greater influence on managers' security issue decisions of long-term investors and banks in Japan than in the U.S.
Journal of financial and quantitative analysis
©1995 University of Washington School of Business Administration.This paper was published in Journal of Financial & Quantitative Analysis and is made available as an electronic reprint (preprint) with permission of University of Washington School of Business Administration. The paper can be found at the following official URL: [http://www.jstor.org/discover/10.2307/2331120?uid=3738992&uid=2129&uid=2&uid=70&uid=4&sid=21103137623083]. One print or electronic copy may be made for personal use only. Systematic or multiple reproduction, distribution to multiple locations via electronic or other means, duplication of any material in this paper for a fee or for commercial purposes, or modification of the content of the paper is prohibited and is subject to penalties under law.