Callable convertible bonds (CBs) that provide call options to the third parties, whose structure is not used in major countries, have been issued since issuances of detachable privately-placed bonds with warrants (BWs) had been banned in 2013. The largest shareholders prefer callable CBs to detachable BWs because they would exercise call option only if CBs are in the money. This study analyses the effect of call option on the announcement effects of CB issuances and exercising conversion rights using 1,496 privately-placed CBs issued between 2013 and 2018. The major findings of this paper are as follows. First, the announcement effects of callable CBs are significantly smaller than those of standard CBs, reflecting negative view of providing call options to the third parties. Second, callable CB issuing firms have better operating performance, higher ownership of the largest shareholders, and higher adoption rate of refixing clauses than standard CB issuing firms. Third, the announcement effects of exercising conversion rights are significantly negative, and those of callabe CBs are significantly smaller than those of standard CBs. To summarize, this study brings structural problems of callable CBs to attention and documents empirical evidences to support our hypothesis. We recommend financial authority to ban the issuance of callable CBs.