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In this paper, I examine the impact of in-the-money convertible bond calls on stock prices, employing a sample of US convertible bond calls over the period 1994-2011. In contrast to previous literature, I find that conversion-forcing convertible bond calls do not significantly influence stock prices. I posit that the discrepancy between my results and those in the literature is caused by amplified screening criteria, especially strong news cleaning. Companies tend to announce calls as side notes to other major corporate news, resulting in an event-study bias. Further, convertible bond design, moneyness of the conversion option at the announcement date, and convertiblearbitrage strategies cast doubt on the negative abnormal returns reported by previous literature. Keywords Conversion-forcing convertible bond calls • Event study JEL Classification G14 • G321 Mergent FISD database, US headquartered companies in non-regulated industries.

of the Wharton School, University of Pennsylvania. Their ambitious goal was to create a book that would be appealing and worth reading for both academics and practitioners.The underlying idea of the book is the separation of financial risks into three tranches: known risks, unknown risks, and unknowable risks (KuU), an approach adopted from a famous 1995 article by Ralph Gomory. The authors propose that the KuU perspective enhances understanding of the diverse and complex field of financial risk and can also help in managing these types of risk.T. Nigbur ( )

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