Are European Convertibles More Debt-Like than the US Issues? An Empirical Analysis

The popular financial press often suggests that convertible debt issued by European firms is more debt-like in nature than convertible debt issued by US firms. This paper is the first to formally test the validity of this common perception. Our evidence indicates that European convertibles are effectively structured to be more debt-like than US convertibles. We also show that European convertible debt announcements induce less negative stockholder reactions than US announcements, which is consistent with the larger debt component of the former securities. Lastly, we explore some potential explanations for the relatively more debt-like design of European convertibles. Our results indicate that this finding may be attributable to both issuer-related and institutional differences across European and US convertible debt markets.

Positive allosteric modulation of P2X7 promotes apoptotic cell death over lytic cell death responses in macrophages

P2X7 is an ATP-gated ion channel that is highly expressed by leukocytes, such as macrophages. Here, it has been demonstrated to be involved in the regulation of various cell death pathways; including apoptosis, pyroptosis, necrosis, and autophagy. However, cell death induction via P2X7 is complex and is reliant upon the nature of the stimulus, the duration of the stimulus, and the cell type investigated. Previous reports state that high extracellular ATP concentrations promote osmotic lysis, but whether positive allosteric modulation of P2X7 in the presence of lower concentrations of ATP condemns cells to the same fate is unknown. In this study, we compared cell death induced by high ATP concentrations, to cell death induced by compound K, a recently identified and potent positive allosteric modulator of P2X7. Based on our observations, we propose that high ATP concentrations induce early cell swelling, loss of mitochondrial membrane potential, plasma membrane rupture, and LDH release. Conversely, positive allosteric modulation of P2X7 primarily promotes an intrinsic apoptosis pathway. This was characterised by an increase in mitochondrial Ca2+, accelerated production of mitochondrial ROS, loss of mitochondrial membrane permeability in a Bax-dependent manner, the potential involvement of caspase-1, and caspase-3, and significantly accelerated kinetics of caspase-3 activation. This study highlights the ability of positive allosteric modulators to calibrate P2X7-dependent cell death pathways and may have important implications in modulating the antimicrobial immune response and in the resolution of inflammation

Are European Convertibles more Debt-like than the US Issues?

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Synergy disclosures in mergers and acquisitions

We examine bidding firms' motives for disclosing a synergy forecast when announcing a merger or acquisition. Our sample consists of 1990 M&A deals, of which 345 announce synergy estimates. Our results suggest that synergy disclosures serve to obtain a more favorable market reception for deals that would otherwise induce highly negative bidder announcement returns. After controlling for the endogeneity of the disclosure decision, synergy forecast disclosures result in approximately 5% higher bidder stock returns. The main deterrents of disclosing synergy values are lack of precise information on synergy values available to bidding firm management, and shareholder litigation risk. Bidders do not seem to use synergy disclosures to strategically influence takeover premiums or competition for the target

Stock price reactions to brand value announcements : Magnitude and moderators

While several studies find a positive impact of brand value on firm value, we still know very little on the variables moderating the brand value-firm value relation. In this study, we address this gap in the literature by developing and testing a new framework on the contingencies affecting the impact of brand value changes on stock returns. Drawing from branding theory, we hypothesize that stock price reactions to brand value changes are more positive for firms with high cash flow vulnerability, valuable growth opportunities, and high potential for further product or service price increases. We empirically examine the importance of these three moderators through an event study analysis of 503 brand value announcements derived from Interbrand's Best Global Brands lists from 2001 to 2012. We obtain evidence of significant abnormal stock returns on brand value announcement dates, with a brand to firm value conversion rate of approximately 4%. Cross-sectional regression analyses of announcement day abnormal stock returns suggest that shareholders mainly value the potential of brands to reduce cash flow vulnerability to adverse shocks. We obtain only mixed evidence on the importance of brands in generating growth, and no evidence for their role in allowing firms to set higher prices. Our results, which hold under a range of sensitivity tests, yield clear managerial guidelines regarding the types of firms for which strong brands matter most

Shareholder wealth effects of modern slavery regulation

We examine the shareholder wealth effects of the adoption of the UK Modern Slavery Act 2015 (MSA). The MSA’s Transparency in Supply Chains clause introduced new reporting requirements mandating certain firms to provide an annual statement outlining how they identify and mitigate modern slavery in their business and supply chain. An event study of stock price reactions of UK firms covered by the MSA to eight events associated with its adoption provides no evidence of abnormal stock returns. We do, however, uncover significant cross-sectional differences in stock price reactions, with results suggesting that the MSA provides a competitive advantage to firms with a demonstrated track record of addressing slavery risk. We find no effects for pre-regulatory Corporate Social Responsibility disclosure levels on stock price reactions. Our findings highlight the economic value of maintaining socially responsible sourcing practices, and inform the current policy debate on the importance of greater transparency in corporate supply chains

Synergy disclosures in mergers and acquisitions

We examine bidding firms’ motives for disclosing a synergy forecast when announcing a merger or acquisition. Our sample consists of 1,990 M&A deals, of which 345 announce synergy estimates. Our results suggest that synergy disclosures serve to obtain a more favorable market reception for deals that would otherwise induce highly negative bidder announcement returns. After controlling for the endogeneity of the disclosure decision, synergy forecast disclosures result in approximately 5% higher bidder stock returns. The main deterrents of disclosing synergy values are lack of precise information on synergy values available to bidding-firm management, and shareholder litigation risk