To Call or Not To Call Convertible Debt

Louis H. Ederington, Gary L. Caton and Cynthia J. Campbell

Financial Management, 1997, vol. 26, issue 1

Abstract: Calls of in-the-money convertible bonds appear to be consistent with the yield advantage, after-tax-cash-flow and safety-premium hypotheses. However, this study does not find any support for the signaling hypothesis or for the often-cited desire on the part of management to extinguish the bondholders' conversion option.

Date: 1997
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