Economics at your fingertips  

Calling Nonconvertible Debt and the Problem of Related Wealth Transfer Effect

Francis Longstaff and Bruce A. Tuckman

Financial Management, 1994, vol. 23, issue 4

Abstract: An often-cited rule in corporate finance is that a firm should call a bond as soon as the bond's market price equals its call price. But, in fact, many callable bonds sell for more than their call prices. One explanation is that the implicit assumption that calls are executed so as to leave capital structure unchanged fails to hold in practice. This paper examines the impact of capital structure changes on optimal call policy and presents empirical evidence consistent with the results of that explanation.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Financial Management is currently edited by Bill Christie

More articles in Financial Management from Financial Management Association University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620. Contact information at EDIRC.
Bibliographic data for series maintained by Courtney Connors (). This e-mail address is bad, please contact .

Page updated 2020-09-05
Handle: RePEc:fma:fmanag:longstaff94