However, whether the death spiral will continue after the conversion is questionable. If the stock price is too low, there might be less liquidity and a higher bid-ask spread. If the loss is material, investors might want to buy shares instead of selling them with the hope of a recovery or government bailout. and found that material loss occurred for the investors.
Some adjustment of the conversion price might offset the impact of market manipulation. McDonald (2011) argued that a fixed share premium convertible structure is least exposed to