Table III. Open in new tab Listed...

	Offering discount
Option	–0.049***	–0.035**	–0.084***	–0.067***
	(–3.393)	(–2.376)	(–4.382)	(–3.356)
Option $\times$ Analyst coverage			0.008***	0.006**
			(3.028)	(2.253)
Delta	0.525***	0.511***	0.533***	0.518***
	(12.190)	(10.759)	(12.106)	(10.800)
Proceeds/MV	0.001***	0.001***	0.000	0.000**
	(3.472)	(3.596)	(1.564)	(2.066)
Log(Maturity)	–0.027*	–0.019	–0.027*	–0.021
	(–1.888)	(–1.311)	(–1.961)	(–1.467)
Combined offering	–0.049***	–0.038**	–0.042**	–0.036**
	(–2.806)	(–2.153)	(–2.511)	(–2.137)
Rule 144A	–0.050***	–0.029**	–0.038***	–0.026*
	(–3.270)	(–2.064)	(–2.640)	(–1.885)
Rated	–0.070***	–0.035**	–0.057***	–0.036**
	(–5.473)	(–2.244)	(–4.450)	(–2.309)
Rated $\times$ Investment grade	–0.011	0.017	0.005	0.020
	(–0.491)	(0.769)	(0.237)	(0.941)
Log(Assets)		–0.024***		–0.018***
		(–4.108)		(–3.078)
Market to book		–0.007*		–0.006
		(–1.882)		(–1.616)
Volatility		1.098**		0.949*
		(2.326)		(1.962)
Amihud $\times 10^{6}$		0.021**		0.019**
		(2.220)		(2.551)
Nasdaq listing		–0.031***		–0.020
		(–2.646)		(–1.647)
Analyst coverage			–0.010***	–0.007***
			(–4.438)	(–2.993)
Constant	–0.033	0.069	0.003	0.062
	(–0.878)	(1.341)	(0.085)	(1.200)
Observations	869	847	869	847
R-squared	0.390	0.426	0.420	0.439
Year FE	Yes	Yes	Yes	Yes

Offering discount

(1)

(2)

(3)

(4)

Option

–0.049***

–0.035**

–0.084***

–0.067***

(–3.393)

(–2.376)

(–4.382)

(–3.356)

Option

\times

Analyst coverage

0.008***

0.006**

(3.028)

(2.253)

Delta

0.525***

0.511***

0.533***

0.518***

(12.190)

(10.759)

(12.106)

(10.800)

Proceeds/MV

0.001***

0.000

0.000**

(3.472)

(3.596)

(1.564)

(2.066)

Log(Maturity)

–0.027*

–0.019

–0.027*

–0.021

(–1.888)

(–1.311)

(–1.961)

(–1.467)

Combined offering

–0.049***

–0.038**

–0.042**

–0.036**

(–2.806)

(–2.153)

(–2.511)

(–2.137)

Rule 144A

–0.050***

–0.029**

–0.038***

–0.026*

(–3.270)

(–2.064)

(–2.640)

(–1.885)

Rated

–0.070***

–0.035**

–0.057***

–0.036**

(–5.473)

(–2.244)

(–4.450)

(–2.309)

Rated

\times

Investment grade

–0.011

0.017

0.005

0.020

(–0.491)

(0.769)

(0.237)

(0.941)

Log(Assets)

–0.024***

–0.018***

(–4.108)

(–3.078)

Market to book

–0.007*

–0.006

(–1.882)

(–1.616)

Volatility

1.098**

0.949*

(2.326)

(1.962)

Amihud

\times 10^{6}

0.021**

0.019**

(2.220)

(2.551)

Nasdaq listing

–0.031***

–0.020

(–2.646)

(–1.647)

Analyst coverage

–0.010***

–0.007***

(–4.438)

(–2.993)

Constant

–0.033

0.069

0.003

0.062

(–0.878)

(1.341)

(0.085)

(1.200)

Observations

869

847

869

847

R-squared

0.390

0.426

0.420

0.439

Year FE

Yes

	Offering discount
Option	–0.049***	–0.035**	–0.084***	–0.067***
	(–3.393)	(–2.376)	(–4.382)	(–3.356)
Option $\times$ Analyst coverage			0.008***	0.006**
			(3.028)	(2.253)
Delta	0.525***	0.511***	0.533***	0.518***
	(12.190)	(10.759)	(12.106)	(10.800)
Proceeds/MV	0.001***	0.001***	0.000	0.000**
	(3.472)	(3.596)	(1.564)	(2.066)
Log(Maturity)	–0.027*	–0.019	–0.027*	–0.021
	(–1.888)	(–1.311)	(–1.961)	(–1.467)
Combined offering	–0.049***	–0.038**	–0.042**	–0.036**
	(–2.806)	(–2.153)	(–2.511)	(–2.137)
Rule 144A	–0.050***	–0.029**	–0.038***	–0.026*
	(–3.270)	(–2.064)	(–2.640)	(–1.885)
Rated	–0.070***	–0.035**	–0.057***	–0.036**
	(–5.473)	(–2.244)	(–4.450)	(–2.309)
Rated $\times$ Investment grade	–0.011	0.017	0.005	0.020
	(–0.491)	(0.769)	(0.237)	(0.941)
Log(Assets)		–0.024***		–0.018***
		(–4.108)		(–3.078)
Market to book		–0.007*		–0.006
		(–1.882)		(–1.616)
Volatility		1.098**		0.949*
		(2.326)		(1.962)
Amihud $\times 10^{6}$		0.021**		0.019**
		(2.220)		(2.551)
Nasdaq listing		–0.031***		–0.020
		(–2.646)		(–1.647)
Analyst coverage			–0.010***	–0.007***
			(–4.438)	(–2.993)
Constant	–0.033	0.069	0.003	0.062
	(–0.878)	(1.341)	(0.085)	(1.200)
Observations	869	847	869	847
R-squared	0.390	0.426	0.420	0.439
Year FE	Yes	Yes	Yes	Yes

Table III.

Open in new tab

Listed options and convertible offering discounts

This table presents the relation between having listed options and convertible underpricing. The dependent variable is the offering discount, calculated as (Theoretical Price–Offering Price)/Theoretical Price, where we use the model of TF to compute the theoretical price. Option is a dummy variable indicating issuers with listed options at the time of issuance. In Columns (3) and (4), we include analyst coverage to measure firms’ information environment and interact it with the Option dummy variable. All regressions include year-fixed effects to control for unobserved common factors in each year. All control variables are defined in Appendix A. $T$ -statistics based on clustered standard errors at the firm level are reported in parentheses. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively. Bold values indicates the main estimates of interest.

	Offering discount
	(1)	(2)	(3)	(4)
Option	–0.049***	–0.035**	–0.084***	–0.067***
	(–3.393)	(–2.376)	(–4.382)	(–3.356)
Option $\times$ Analyst coverage			0.008***	0.006**
			(3.028)	(2.253)
Delta	0.525***	0.511***	0.533***	0.518***
	(12.190)	(10.759)	(12.106)	(10.800)
Proceeds/MV	0.001***	0.001***	0.000	0.000**
	(3.472)	(3.596)	(1.564)	(2.066)
Log(Maturity)	–0.027*	–0.019	–0.027*	–0.021
	(–1.888)	(–1.311)	(–1.961)	(–1.467)
Combined offering	–0.049***	–0.038**	–0.042**	–0.036**
	(–2.806)	(–2.153)	(–2.511)	(–2.137)
Rule 144A	–0.050***	–0.029**	–0.038***	–0.026*
	(–3.270)	(–2.064)	(–2.640)	(–1.885)
Rated	–0.070***	–0.035**	–0.057***	–0.036**
	(–5.473)	(–2.244)	(–4.450)	(–2.309)
Rated $\times$ Investment grade	–0.011	0.017	0.005	0.020
	(–0.491)	(0.769)	(0.237)	(0.941)
Log(Assets)		–0.024***		–0.018***
		(–4.108)		(–3.078)
Market to book		–0.007*		–0.006
		(–1.882)		(–1.616)
Volatility		1.098**		0.949*
		(2.326)		(1.962)
Amihud $\times 10^{6}$		0.021**		0.019**
		(2.220)		(2.551)
Nasdaq listing		–0.031***		–0.020
		(–2.646)		(–1.647)
Analyst coverage			–0.010***	–0.007***
			(–4.438)	(–2.993)
Constant	–0.033	0.069	0.003	0.062
	(–0.878)	(1.341)	(0.085)	(1.200)
Observations	869	847	869	847
R-squared	0.390	0.426	0.420	0.439
Year FE	Yes	Yes	Yes	Yes

	Offering discount
	(1)	(2)	(3)	(4)
Option	–0.049***	–0.035**	–0.084***	–0.067***
	(–3.393)	(–2.376)	(–4.382)	(–3.356)
Option $\times$ Analyst coverage			0.008***	0.006**
			(3.028)	(2.253)
Delta	0.525***	0.511***	0.533***	0.518***
	(12.190)	(10.759)	(12.106)	(10.800)
Proceeds/MV	0.001***	0.001***	0.000	0.000**
	(3.472)	(3.596)	(1.564)	(2.066)
Log(Maturity)	–0.027*	–0.019	–0.027*	–0.021
	(–1.888)	(–1.311)	(–1.961)	(–1.467)
Combined offering	–0.049***	–0.038**	–0.042**	–0.036**
	(–2.806)	(–2.153)	(–2.511)	(–2.137)
Rule 144A	–0.050***	–0.029**	–0.038***	–0.026*
	(–3.270)	(–2.064)	(–2.640)	(–1.885)
Rated	–0.070***	–0.035**	–0.057***	–0.036**
	(–5.473)	(–2.244)	(–4.450)	(–2.309)
Rated $\times$ Investment grade	–0.011	0.017	0.005	0.020
	(–0.491)	(0.769)	(0.237)	(0.941)
Log(Assets)		–0.024***		–0.018***
		(–4.108)		(–3.078)
Market to book		–0.007*		–0.006
		(–1.882)		(–1.616)
Volatility		1.098**		0.949*
		(2.326)		(1.962)
Amihud $\times 10^{6}$		0.021**		0.019**
		(2.220)		(2.551)
Nasdaq listing		–0.031***		–0.020
		(–2.646)		(–1.647)
Analyst coverage			–0.010***	–0.007***
			(–4.438)	(–2.993)
Constant	–0.033	0.069	0.003	0.062
	(–0.878)	(1.341)	(0.085)	(1.200)
Observations	869	847	869	847
R-squared	0.390	0.426	0.420	0.439
Year FE	Yes	Yes	Yes	Yes

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