Calling Nonconvertible Debt and the Problem of Related Wealth Transfer Effect
AbstractAn often-cited rule in corporate finance is that a firm should call a bond as soon as the bond's market price equals its call price. But, in fact, many callable bonds sell for more than their call prices. One explanation is that the implicit assumption that calls are executed so as to leave capital structure unchanged fails to hold in practice. This paper examines the impact of capital structure changes on optimal call policy and presents empirical evidence consistent with the results of that explanation.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Financial Management Association in its journal Financial Management.
Volume (Year): 23 (1994)
Issue (Month): 4 (Winter)
Contact details of provider:
Postal: University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620
Web page: http://www.fma.org/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Y. D'Halluin & P. A. Forsyth & K. R. Vetzal & G. Labahn, 2001. "A numerical PDE approach for pricing callable bonds," Applied Mathematical Finance, Taylor & Francis Journals, vol. 8(1), pages 49-77.
- Marco Realdon, 2006.
"Valuation of the Firm's Liabilities when Equity Holders are also Creditors,"
06/16, Department of Economics, University of York.
- Marco Realdon, 2007. "Valuation of the Firm's Liabilities When Equity Holders Are Also Creditors," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(5-6), pages 950-975.
- Sarkar, Sudipto & Hong, Gwangheon, 2004. "Effective duration of callable corporate bonds: Theory and evidence," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 499-521, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Courtney Connors) The email address of this maintainer does not seem to be valid anymore. Please ask Courtney Connors to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.