The second section discusses governmental regulation

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The second section discusses governmentalregulation versus self-regulation, and the moralhazards that motivate such regulation. This topicraises questions the trade-off between the mixture ofpublic with private regulation. In banking,professional codes of conduct are not as prominentas in other professions such as medical and legal.Self- and governmental regulation appear to carryentailments for the future of financial services. Thehigher cost of public regulation should shiftregulation inward, thus broadening the opportunitiesfor informal contracting.The third section visits the CommunityReinvestment Act of 1977, and the effect it has, orrather has not had, on bankers. Costly learningremains necessary on both sides of the issue.Anthropological and sociological insights may berequired to fathom the stubborn resistance of financialdiscrimination, if indeed, it exists, to fallinginformation costs. I raise an anomaly left in the wakeof the declining cost of information: Shouldn't therebe a steady decline in discrimination?The basic point: it's the technology. Theinnovations, the destabilization of institutions, thedeclining potency of government regulation all tieback to the drop in the cost of information.Stuart I. GreenbaumFinancial Managment, Vol.25, No.2, Summer 1996, pages 86 - 92This content downloaded from 41.89.6.81 on Sat, 28 Jan 2017 18:38:44 UTCAll use subject to
FM EXECUTIVE SUMMARIES 107Why Do FirmFinancial economists have hybrid nature of convertibdebt and part equity. Researcthe security by unbundlincomponents, exploring the practices, and measuring marof convertible debt. Yet whuse convertible debt in the firto date seeks to reconcile tmotives for issuing such secuconsequences of their use. available evidence on the stfor why convertible debt is uthe market's reaction to the theoretical and empirical finPrior surveys of financial primary motives for the use most commonly cited motiveis issued as an alternative to cbelieve that their equity is unManagers also report that convertible debt issometimes issued as an alternative to straight debt inan effort to "sweeten" that debt by adding a conversionprivilege that lowers the coupon rate required byinvestors.We surveyed financial managers associated withfirms that issued convertible debt between 1987 and1993. The traditional reasons for issuing convertibledebt are still important. Thus, convertible debt is oftenissued to sweeten straight debt and thereby to buydown the coupon rate. This rationale is stronglycorrelated with managers' reliance on investmentbankers' recommendations to use the security andother firms' recent successful convertible offerings.However, smaller firms are found to rely more heavilyon investment bankers' recommendations. We alsoconfirm a decreasing reliance on convertibles asdelayed equity financing. This motive is positivelycorrelated with common stock being viewed as aprimary alternative to convertibles. The size of the

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