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 Harris and Raviv's hypothesis that managers with favorable information delay their calls and will call the debt if and only if their information is unfavorable.
|Number of pages||15|
|Publication status||Published - 1 Jan 1991|
ASJC Scopus subject areas
- Economics and Econometrics