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Corporate Restructuring and Bondholder Wealth

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  • Renneboog, L.D.R.
  • Szilagyi, P.G.

    (Tilburg University, Center for Economic Research)

Abstract

This paper provides an overview of existing research on how corporate restructuring affects the wealth of creditors.Restructuring is defined as any transaction that affects the firm's underlying capital structure.Thus, it reaches well beyond asset restructuring and includes transactions such as leveraged buyouts, security issues and exchanges, and the issuance of stock options.The analysis identifies significant gaps in the literature, emphasizes the potential differences between creditor wealth changes in market- and network-oriented governance systems, and provides valuable insights into methodological advances.Many issues obviously remain, as empirical evidence is still incomplete and focuses exclusively on the US.In network-oriented regimes, the potential for research remains constrained by the lesser development of bond markets that disclose information on creditor wealth shocks.Still, on-going debt securitization should now allow for the investigation of at least some critical issues.This is imperative, as the position of creditors in the firm differs substantially across governance systems despite the gradual convergence of these regimes across the world.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2006-23.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:200623

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Keywords: bondholder wealth; corporate restructuring; mergers and acquisitions; event studies; bond returns;

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Cited by:
  1. Imbierowicz, Björn & Wahrenburg, Mark, 2013. "Wealth transfer effects between stockholders and bondholders," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(1), pages 23-43.
  2. Goergen, Marc & Renneboog, Luc, 2011. "Managerial compensation," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1068-1077, September.
  3. Michael Carney & Eric Gedajlovic & Sujit Sur, 2011. "Corporate governance and stakeholder conflict," Journal of Management and Governance, Springer, vol. 15(3), pages 483-507, August.

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