TY - JOUR
T1 - Conversion privileges? The effect of convertible debt on strategic emphasis and firm performance
AU - Wen, Yuan
AU - John Mariadoss, Babu
AU - Bi, Sheng
N1 - Publisher Copyright:
© 2024 Taylor & Francis Group, LLC.
PY - 2025
Y1 - 2025
N2 - Convertible debt is one of the most important financial strategies. However, how convertible debt affects marketing decision-making remains unknown. Our study tends to answer two research questions: (1) How does convertible debt impact firm performance through strategic emphasis? (2) How does the impact of convertible debt on firm performance vary under market turbulence? Drawing on the agency theory, we found that convertible debt results in strategic emphasis shifting into exploitation activities, which ultimately has a negative influence on company performance. In addition, we also found that in a turbulent market, companies that issue convertible debt would invest more in exploitative activities than in a non-turbulent market, which would result in a more negative influence on firm performance. Our research contributes to convertible debt and strategic emphasis literature. For management teams, our research provides evidence that the marketing consequences of convertible debt need to be carefully considered in strategic decision-making.
AB - Convertible debt is one of the most important financial strategies. However, how convertible debt affects marketing decision-making remains unknown. Our study tends to answer two research questions: (1) How does convertible debt impact firm performance through strategic emphasis? (2) How does the impact of convertible debt on firm performance vary under market turbulence? Drawing on the agency theory, we found that convertible debt results in strategic emphasis shifting into exploitation activities, which ultimately has a negative influence on company performance. In addition, we also found that in a turbulent market, companies that issue convertible debt would invest more in exploitative activities than in a non-turbulent market, which would result in a more negative influence on firm performance. Our research contributes to convertible debt and strategic emphasis literature. For management teams, our research provides evidence that the marketing consequences of convertible debt need to be carefully considered in strategic decision-making.
UR - http://www.scopus.com/inward/record.url?scp=85214267416&partnerID=8YFLogxK
U2 - 10.1080/10696679.2024.2446149
DO - 10.1080/10696679.2024.2446149
M3 - Article
AN - SCOPUS:85214267416
SN - 1069-6679
JO - Journal of Marketing Theory and Practice
JF - Journal of Marketing Theory and Practice
ER -