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Title: The Choice Between Callable And Noncallable Bonds
Authors: Booth, L
Gounopoulos, D
Skinner, F
Keywords: callable and noncallable bonds;financial and nonfinancial industries;financial bonds
Issue Date: 2014
Publisher: Blackwell Publishing Ltd
Citation: Journal of Financial Research, 37:4, pp. 435 - 460, 2014
Abstract: We examine the choice and the offer spreads between callable and noncallable bonds. We find significant differences by industry sector and therefore segment our results by financial and nonfinancial industries. For the financial sector, the popularity of callable and noncallable bonds is significantly related to the economic environment. Financial and high-grade nonfinancial callable bonds are also more likely to be issued via a shelf prospectus. Although firms that issue callable bonds do not consistently display the characteristics associated with severe agency problems, the issue choice for below-investment-grade nonfinancial and lower rated financial bonds, where we can expect agency problems to be more severe, is more consistent with agency theory than is the issue choice for higher rated bonds.
Description: This article has been made available through the Brunel Open Access Publishing Fund.
ISSN: 0270-2592
Appears in Collections:Brunel OA Publishing Fund
Dept of Economics and Finance Research Papers

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