In 2006, one-third of the U.S. convertible debt issuers simultaneously repurchased their own stock. This paper explores the motivations for these combined transactions. We argue that convertible debt issuers buy back their stock in order to facilitate short selling by convertible debt arbitrageurs, thereby mitigating the negative stock price reaction at the convertible debt issuance. In line with this prediction, we find that issue-date abnormal returns are significantly less negative for

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... ed offerings than for uncombined convertible issues. We also document that convertible arbitrage explains both the size and the timing of the stock repurchases. JEL classification: G32