ABSTRACT This paper analyzes how convertible debt is used in a high-risk, emerging industry setti... more ABSTRACT This paper analyzes how convertible debt is used in a high-risk, emerging industry setting. We argue that there is a lifecycle component to the design and market impact of convertible debt securities. Contrary to prior cross-industry research findings, we show that convertible debt in the renewable energy industry tends to have a debt-like structure, and its issue is associated with strongly nega¬tive announce¬ment returns. We further show that convertible issuers face high adverse selection costs, which they attempt to mitigate by sending signals about firm quality. However, these signals tend to fail because the market anticipates this behavior, and perceives convertible issuers as being priced out of the equity markets. Firm and industry characteristics support this view, because financial distress indicators suggest the use of more equity-like financing instruments.
The Quarterly Review of Economics and Finance, 2006
We analyze the short-run and long-run performance of the largest 100 German firms that experience... more We analyze the short-run and long-run performance of the largest 100 German firms that experience monthly stock price changes of more than ±20% between 1990 and 2003. The results indicate that the return patterns following large price increases are consistent with the ...
ABSTRACT The group of sovereign wealth funds (SWF) is gaining growing importance in the discussi... more ABSTRACT The group of sovereign wealth funds (SWF) is gaining growing importance in the discussion on corporate governance quality as critical success factor for the long-run performance of exchange listed companies. These institutional investors mostly act as long-term oriented minority block holders (anchor investors) in international capital markets. We show for a specific case how capital market participants evaluate SWF investments in exchange listed companies. From the overall stock price reaction we can conjecture that investors expect from this investment of Aabar a positive impact on the corporate governance. However, there is also the alternative explanation that SWF have superior target selection abilities which allow them to detect undervalued companies in an inefficient capital market.
Review of Quantitative Finance and Accounting, 2010
Most stock markets are characterized by a number of parallel operating trading systems which inte... more Most stock markets are characterized by a number of parallel operating trading systems which interact intensively with each other. Usually, smaller trading platforms take the leading domestic main market as a benchmark in the price discovery process and for closing open trading positions. But what happens if the smaller trading systems suddenly have to act without this benchmark platform? We examine the effects of the reduction of the daily business hours of a screen based main trading system while a parallel floor based trading system keeps on operating. We provide evidence that liquidity improves while informed trading and informational efficiency of prices decrease at the floor based trading system as a result of the no longer operating main market. While prior research on parallel trading focuses on changes due to a growing number of trading venues, we present the first evidence on market effects when the main trading platform reduces trading hours.
ABSTRACT This paper analyzes how convertible debt is used in a high-risk, emerging industry setti... more ABSTRACT This paper analyzes how convertible debt is used in a high-risk, emerging industry setting. We argue that there is a lifecycle component to the design and market impact of convertible debt securities. Contrary to prior cross-industry research findings, we show that convertible debt in the renewable energy industry tends to have a debt-like structure, and its issue is associated with strongly nega¬tive announce¬ment returns. We further show that convertible issuers face high adverse selection costs, which they attempt to mitigate by sending signals about firm quality. However, these signals tend to fail because the market anticipates this behavior, and perceives convertible issuers as being priced out of the equity markets. Firm and industry characteristics support this view, because financial distress indicators suggest the use of more equity-like financing instruments.
The Quarterly Review of Economics and Finance, 2006
We analyze the short-run and long-run performance of the largest 100 German firms that experience... more We analyze the short-run and long-run performance of the largest 100 German firms that experience monthly stock price changes of more than ±20% between 1990 and 2003. The results indicate that the return patterns following large price increases are consistent with the ...
ABSTRACT The group of sovereign wealth funds (SWF) is gaining growing importance in the discussi... more ABSTRACT The group of sovereign wealth funds (SWF) is gaining growing importance in the discussion on corporate governance quality as critical success factor for the long-run performance of exchange listed companies. These institutional investors mostly act as long-term oriented minority block holders (anchor investors) in international capital markets. We show for a specific case how capital market participants evaluate SWF investments in exchange listed companies. From the overall stock price reaction we can conjecture that investors expect from this investment of Aabar a positive impact on the corporate governance. However, there is also the alternative explanation that SWF have superior target selection abilities which allow them to detect undervalued companies in an inefficient capital market.
Review of Quantitative Finance and Accounting, 2010
Most stock markets are characterized by a number of parallel operating trading systems which inte... more Most stock markets are characterized by a number of parallel operating trading systems which interact intensively with each other. Usually, smaller trading platforms take the leading domestic main market as a benchmark in the price discovery process and for closing open trading positions. But what happens if the smaller trading systems suddenly have to act without this benchmark platform? We examine the effects of the reduction of the daily business hours of a screen based main trading system while a parallel floor based trading system keeps on operating. We provide evidence that liquidity improves while informed trading and informational efficiency of prices decrease at the floor based trading system as a result of the no longer operating main market. While prior research on parallel trading focuses on changes due to a growing number of trading venues, we present the first evidence on market effects when the main trading platform reduces trading hours.
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Papers by Dirk Schiereck