Using a sample of 4,148 convertibles issued over 1990–2009 by companies listed in 35 countries, the authors exploited worldwide differences in short-sale constraints to examine whether short selling by convertible arbitrageurs creates downward pressure on convertible issuers’ stock prices. They found that short-sale constraints have a positive effect on issue-date abnormal stock returns, which suggests that a substantial part of the stock price effect of convertible issues is attributable to convertible arbitrageurs.
![Bridge over ocean](/-/media/images/hero/rpc-theme-heros/bridge-default.jpg?w=2560&hash=C67CE44B69F875C23628FEF2E3F26808)