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The choice between non-callable and callable bonds
journal contribution
posted on 2023-06-08, 18:05 authored by Laurence Booth, Dimitrios Gounopoulos, Frank SkinnerWe examine the choice and the offer spreads between callable and non-callable bonds. We find significant differences by industry sector so our results are segmented by financial and non-financial industries. For the financial sector, the popularity of callable and non-callable bonds is significantly related to the economic environment. Financial and high grade non-financial callable bonds are also more likely to be issued via a shelf prospectus. While firms that issue callable bonds do not consistently display the characteristics associated with severe agency problems, the issue choice for below investment grade non-financial and lower rated financial bonds, where we can expect agency problems to be more severe, is more consistent with agency theory than the issue choice for higher rated bonds.
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Publication status
- Published
File Version
- Accepted version
Journal
Journal Of Financial ResearchISSN
0270-2592Publisher
WileyExternal DOI
Volume
37Page range
435-460Department affiliated with
- Business and Management Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2014-08-12First Compliant Deposit (FCD) Date
2014-08-12Usage metrics
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