Concurrent offerings of common stock and convertible securities have represented an important source of external finance for US corporations during recent years, which they have used to raise well over 70 billion USD during 2000 through 2002 alone. We find important differences in firm characteristics and investor reactions for companies conducting concurrent offerings according to the nature of the conversion feature attached to the convertible security. Firms using mandatory convertibles (MCF firms) alongside common stock are firms facing low adverse selection and high financial distress costs. These characteristics and abnormal return patterns around and after the transactions are consistent with a signalling-hypothesis. Firms using ordinary convertible (OCF) securities alongside common stock look like firms with valuable investment opportunities prior to the offering. Yet the valuation impact of the transaction announcement amounts to –7%. Moreover, one third of OCF firms are delisted and the market value is nearly halved for the survivors during an 18-month post-issue period. We test several hypotheses, but the empirical observations remain puzzling.

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