The optimal call policy for convertible bonds: Is there a market memory effect?
Abstract
This article examines the market memory effect in convertible bond markets. We look at the pricing of convertible bonds issued after the original issuer redeemed previous issues without giving an opportunity for investors to benefit from bond value appreciation. We find evidence that the market underprices new convertible bond issues of firms that called their previous convertible bonds early compared with new convertibles bonds of firms that called their previous convertibles late.Download Info
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Bibliographic Info
Article provided by Taylor and Francis Journals in its journal Applied Economics Letters.
Volume (Year): 19 (2012)
Issue (Month): 7 (May)
Pages: 661-664
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Web page: http://www.tandf.co.uk/journals/routledge/13504851.html
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Bruce D. Grundy & Patrick Verwijmeren, 2012. "Dividend-Protected Convertible Bonds and the Disappearance," Tinbergen Institute Discussion Papers 12-060/2/DSF37, Tinbergen Institute.
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