The Choice Among Non-Callable and Callable Bonds

Lawrence Booth, Dimitrios Gounopoulos, Frank Skinner

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This paper examines the choice and the pricing of callable and non-callable bonds. The popularity of callable and non-callable bonds is significantly related to the economic environment. Callable bonds are also more likely to be issued via a shelf prospectus and are more likely to be issued by banks than non-callable bonds. Evidently, firms that prefer to issue callable bonds seek to take advantage of their ability to process economic information but must pay a premium relative to straight bonds for the call feature. Firms that issue callable bonds do not consistently display the characteristics associated with severe agency problems.
Original languageEnglish
Pages (from-to)435 - 460
Number of pages26
JournalJournal Of Financial Research
Issue number4
Early online date25 Dec 2014
Publication statusPublished - 2014


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