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The cost of financing with callable bonds : an empirical study
[Le coût du financement par obligations rachetables : une étude empirique]

Author

Listed:
  • Maxime Debon

    (UEVE - Université d'Évry-Val-d'Essonne, LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - EESC-GEM Grenoble Ecole de Management - UEVE - Université d'Évry-Val-d'Essonne - TEM - Télécom Ecole de Management)

  • Franck Moraux

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Patrick Navatte

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper examines the cost of financing with callable bonds on a sample of 2927 US bonds issued at par between 1984 and 2014. Our hedonic regression model indicates, among other things, that issuing callable bonds rather than ordinary bonds costs about 10% of the coupon rate and that the additional cost may vary significantly across time. Interestingly, results of a couple of decomposition models suggest that issuers may benefit from issuing callable bonds.

Suggested Citation

  • Maxime Debon & Franck Moraux & Patrick Navatte, 2015. "The cost of financing with callable bonds : an empirical study [Le coût du financement par obligations rachetables : une étude empirique]," Post-Print halshs-01238561, HAL.
    • Handle: RePEc:hal:journl:halshs-01238561
    DOI: 10.4000/fcs.1612
    as

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