Credit default swaps and corporate debt structure

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Author(s)

Related Research Unit(s)

Detail(s)

Original languageEnglish
Article number102494
Journal / PublicationJournal of Corporate Finance
Volume83
Online published29 Sept 2023
Publication statusPublished - Dec 2023

Abstract

Whether and how credit default swaps (CDSs) affect corporate debt structure remains an unanswered question. We find that firms use more public debt relative to bank debt when CDSs referencing their debt start trading. The results are robust to the endogeneity of CDS trading. Furthermore, the increase in public debt is concentrated in senior bonds and notes, which are the most common CDS reference assets. The effect of CDS trading is most pronounced when bond underwriters take a net selling CDS position and for informationally opaque firms. These findings suggest that the hedging and informational roles of CDSs have real effects on corporate debt structure. © 2023

Research Area(s)

  • Corporate debt structure, Credit default swaps, Hedging, Information environment

Bibliographic Note

Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).

Citation Format(s)

Credit default swaps and corporate debt structure. / Chen, Yangyang; Saffar, Walid; Shan, Chenyu et al.
In: Journal of Corporate Finance, Vol. 83, 102494, 12.2023.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review