Partially Anticipated Convertible Calls

Ji-Chai Lin and K C Chen

The Financial Review, 1991, vol. 26, issue 4, 501-15

Abstract: This paper derives estimators that measure the impact of foregoing an opportunity to call convertible debt and the call announcement effect on the value of the firm. The results indicate that positive abnormal returns are associated with foregoing a call, and returns are negative upon the announcement of the call. These results are consistent with M. Harris and A. Raviv's (1985) hypothesis that managers with favorable information delay their calls and will call the debt if and only if their information is unfavorable. Copyright 1991 by MIT Press.

Date: 1991
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