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| Content Provider | Springer Nature Link |
|---|---|
| Author | West, Jason |
| Copyright Year | 2011 |
| Abstract | This paper shows that the probability of exercise of convertible bonds issued against a firm’s stock directly affects the liquidity of the stock itself. Using the ratio of absolute stock return to its dollar volume as a proxy for stock liquidity I demonstrate that there is a direct and positive relationship between conversion probability and stock liquidity while controlling for firm size, book to market equity value and firm beta. I describe the effect of unlisted convertible debt on the liquidity of listed firms in the US, Korea and Singapore. The effects of conversion probability on stock liquidity are less pronounced for smaller firms, which helps explain time series variations in the liquidity premiums for smaller firms over time. The relationship between convertibles and stock liquidity is mainly attributed to the expected increase in the number of shares available for trade upon conversion and the expected change in the capital structure of the firm. |
| Starting Page | 1 |
| Ending Page | 21 |
| Page Count | 21 |
| File Format | |
| ISSN | 13872834 |
| Journal | Asia-Pacific Financial Markets |
| Volume Number | 19 |
| Issue Number | 1 |
| e-ISSN | 15736946 |
| Language | English |
| Publisher | Springer US |
| Publisher Date | 2011-03-02 |
| Publisher Place | Boston |
| Access Restriction | One Nation One Subscription (ONOS) |
| Subject Keyword | Liquidity Convertible bonds International Economics Financial Economics Econometrics Economic Theory Finance/Investment/Banking |
| Content Type | Text |
| Resource Type | Article |
| Subject | Finance |
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