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Corporate Restructuring and Bondholder Wealth

  • Luc Renneboog
  • Peter G. Szilagyi

"This paper provides an overview of existing research on how corporate restructuring affects bondholder wealth. Restructuring is defined as any transaction which affects the firm's riskiness by changing its 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. We identify significant gaps in the literature, emphasize the potential differences in bond performance between market- and stakeholder-oriented corporate governance systems, and provide valuable insights into methodological advances. We find that many issues remain as the empirical evidence is often inconclusive and focuses almost exclusively on the US. Research on other countries remains constrained by the lesser development of their bond markets, but is equally imperative because the position and bargaining power of creditors vis-à-vis the firm differ substantially across countries and governance regimes." Copyright (c) 2007 The Authors Journal compilation (c) 2007 Blackwell Publishing Ltd.

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Article provided by European Financial Management Association in its journal European Financial Management.

Volume (Year): 14 (2008)
Issue (Month): 4 ()
Pages: 792-819

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Handle: RePEc:bla:eufman:v:14:y:2008:i:4:p:792-819
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