TY  - JOUR
AU  - Stein,Jeremy C.
TI  - Convertible Bonds as "Back Door" Equity Financing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4028
PY  - 1992
Y2  - March 1992
UR  - http://www.nber.org/papers/w4028
L1  - http://www.nber.org/papers/w4028.pdf
N1  - Author contact info:
Jeremy C. Stein
Department of Economics
Harvard University
Littauer 209
Cambridge, MA  02138
Tel: 617/496-6455
Fax: 617/496-7352
E-Mail: jeremy_stein@harvard.edu
AB  - This paper argues that corporations may use convertible bonds as an indirect (albeit possibly risky) method for getting equity into their capital structures in situations where adverse selection problems make a conventional stock issue unattractive. Unlike other theories of convertible bond issuance, the model of this paper highlights: 1) the importance of call provisions on convertibles; and 2) the significance of costs of financial distress to the Information content of a convertible issue.
ER  -