Corporate Call Policy for Nonconvertible Bonds

Posted: 27 Jun 2000

See all articles by Tao-Hsien Dolly King

Tao-Hsien Dolly King

affiliation not provided to SSRN

David C. Mauer

affiliation not provided to SSRN

Abstract

We examine corporate call policy for 1,642 nonconvertible bonds that were called during the period 1975-94. The vast majority of firms delay calls and call when the bond price exceeds the call price. We find that larger, less liquidity constrained firms with a larger opportunity cost of delaying a call have shorter call delays. There is no evidence that refunding transaction costs, wealth redistribution effects, call notice periods, or a desire to eliminate restrictive covenants influence the timing of calls. An examination of call motives suggests that there is no one underlying motive that fits the average call.

JEL Classification: G31, G32

Suggested Citation

King, Tao-Hsien Dolly and Mauer, David C., Corporate Call Policy for Nonconvertible Bonds. Available at SSRN: https://ssrn.com/abstract=229188

Tao-Hsien Dolly King

affiliation not provided to SSRN

David C. Mauer (Contact Author)

affiliation not provided to SSRN

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