Convertible call policies. An empirical analysis of an information-signaling hypothesis

Aharon R. Ofer*, Ashok Natarajan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

59 Scopus citations

Abstract

This paper tests an information-signaling hypothesis as a potential explanation for corporate convertible bond call policies and for the negative share price reaction to the announcement of the calls. We test this hypothesis by trying to ascertain whether the information signaled is realized. Our results show an unexpected decline in the firm's performance subsequent to the call. We also find significant negative cumulative returns during a sixty-month period following the calls.

Original languageEnglish (US)
Pages (from-to)91-108
Number of pages18
JournalJournal of Financial Economics
Volume19
Issue number1
DOIs
StatePublished - Sep 1987

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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