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In-House

Photo: John Lacko

Yaman’s Research Puts Her at the Forefront of Convertible Bonds Trends Noting an uptick in convertible bonds deals last fall, CFO magazine sought out an expert to help explain trends in this area and found one of the leading experts on the subject, the college’s own Dr. Devrim Yaman, professor of finance, who has conducted extensive research in debt and equity issues, earnings warnings and corporate takeovers. “One of the less studied securities in finance is convertible bonds. These securities are a combination of straight bonds and a warrant. The warrant gives the investors the right to convert the bonds into the common stock of the issuing company,” says Yaman. In other words, companies issue convertible bonds as an alternative way of financing with debt without risking voting control over

In-House Experts

the company. But, according to Yaman’s research, companies risk an unfavorable share-price reaction. She found that a company’s share price dropped an average of 2 percent in the seven days around the announcement of a convertible. Yaman notes that continuing research will yield an even better understanding of the reaction to issuing convertible bonds. “Convertible bonds will continue to be popular since they allow companies to raise funds while paying lower coupons,” she says. “Since they are popular in financial markets, they will continue to be an interesting research area. I expect more research on these securities in international markets in the future,” says Yaman. During her career, Yaman has studied

several issues related to convertible bonds, including why firms choose to issue convertible bonds as opposed to other securities; how firms design these securities; how firms issuing convertible bonds perform in the long-run and the factors that affect this performance; and simultaneous offerings of convertible bonds along with other securities. Yaman, a CFA charter holder, earned her Ph.D. from the University of New Orleans and teaches corporate finance, computer applications in finance and investment courses. Her research has been published in the Journal of Banking and Finance, Financial Management and Financial Review, and she has presented it at national and international conferences.


Business - July, 2013