The Determinants of Recapitalization through Issuing Convertible Bond and Capital Structure Adjustment Behavior

We provide an empirical analysis concerning the determinants of capital structure adjustment behavior combining convertible bond issuance and share repurchases. The analysis suggests that there are two determinants: first, the replacement of dividends to existing shareholders with interest paid to convertible creditors in relatively small amounts, and second, the apparent improvement in profitability indicators that do not necessarily lead directly to an increase in corporate value.

Management Innovation Research Center

No.233