Tewari, Manish; Byrd, Anthony; Ramanlal, Pradipkumar - In: Journal of Financial Economics 115 (2015) 2, pp. 349-360
We identify the call premium in nonconvertible callable bonds as an effective contracting provision to address agency conflict due to reinvestment risk and credit rating improvements. We analyze 4,495 bonds issued between 1980 and 2012. When interest rates are high, a majority of...