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Financial contracting and re-rating experience, the cases of make whole, claw back and other wise ordinary callable bonds

Gounopoulos, D (2012) Financial contracting and re-rating experience, the cases of make whole, claw back and other wise ordinary callable bonds Journal of Business Finance and Accounting (4th Round).

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Abstract

The literature states that ordinary callable bonds help resolve several agency issues while make whole and claw back bonds are supposed to resolve the underinvestment problem. The justification for refinements of the classic call option is not clear as firstly, the classic call option seems able to handle the underinvestment problem anyway and secondly, the existing empirical evidence does not examine whether make whole and claw back bondholders actually benefit from the resolution of agency problems. We find evidence that firms’ do select make whole and claw back provisions to better confront the underinvestment problem for below investment grade bonds.

Item Type: Article
Subjects : Economics
Authors :
AuthorsEmailORCID
Gounopoulos, DUNSPECIFIEDUNSPECIFIED
Date : 2012
Identification Number : 10.2139/ssrn.1333371
Copyright Disclaimer : This is the peer reviewed version of the following article: Gounopoulos, D (2012) Financial contracting and re-rating experience, the cases of make whole, claw back and other wise ordinary callable bonds Journal of Business Finance and Accounting (4th Round), which has been published in final form at http://dx.doi.org/10.2139/ssrn.1333371. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Additional Information : This is the peer reviewed version of the following article: Gounopoulos, D (2012) Financial contracting and re-rating experience, the cases of make whole, claw back and other wise ordinary callable bonds Journal of Business Finance and Accounting (4th Round), which has been published in final form at http://dx.doi.org/10.2139/ssrn.1333371. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Depositing User : Symplectic Elements
Date Deposited : 23 Feb 2016 16:26
Last Modified : 23 Feb 2016 16:26
URI: http://epubs.surrey.ac.uk/id/eprint/154256

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