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We examine whether a firm's debt maturity structure affects its credit quality. Consistent with theory, we find that firms with greater exposure to rollover risk (measured by the amount of long-term debt payable within a year relative to assets) have lower credit quality; long-term bonds issued...
Persistent link: https://www.econbiz.de/10013095543
This paper revisits recent investigations into the role credit ratings play in the marginal financing behavior of firms. While it has long been documented that credit ratings may be an important determinant of firm capital structure policy, academics have only recently subjected this motivation...
Persistent link: https://www.econbiz.de/10012938502
Our study examines firms’ motivation to issue hybrid bonds. Hybrid bonds have been issued in more than 15 different countries around the world and have been the most relevant class of hybrid securities in these countries since 2005. A hybrid bond offers several structuring opportunities....
Persistent link: https://www.econbiz.de/10013296622
This paper provides the first empirical evidence of the externalities of credit default swaps (CDS). We find that a firm's leverage is lower when a larger proportion of its revenue derives from customers referenced by CDS. This finding is robust to alternative samples and measures, placebo...
Persistent link: https://www.econbiz.de/10013062471
We investigate the informational content of credit default swap (CDS) spreads for future volatility of (firm) assets and equity. In the cross-section, CDS spreads are significantly more informative about future asset than equity volatility. The informational content of historical and option...
Persistent link: https://www.econbiz.de/10012848868
Credit default swaps (CDSs) are an effective tool to trade credit risk, and they can improve the corporate information environment. We find that firms use more public debt and less bank debt when CDSs reference their debt start trading. The results are robust to the endogeneity of CDS trading....
Persistent link: https://www.econbiz.de/10012852400
This paper provides evidence that firm value declines when credit default swaps (CDS) are initiated, and that the effect is greater when CDS trading activity is higher. This decline, which arises from an increase in the cost of capital as opposed to a decrease in free cash flows, traces to a...
Persistent link: https://www.econbiz.de/10012970775
This paper provides the first empirical evidence of the externalities of credit default swaps (CDS). We find that a firm's leverage is lower when a larger proportion of its revenue is derived from CDS-referenced customers. This finding is robust to alternative samples and measures, placebo...
Persistent link: https://www.econbiz.de/10013032003
Credit risk rating is shown to be a relevant determinant in order to estimate good corporate governance and to self-optimize capital structure. The conclusion is argued from a study on a selected (and justified) sample of (182) companies listed on the Shanghai Stock Exchange (SHSE) and the...
Persistent link: https://www.econbiz.de/10011778650
This paper empirically examines the significance of credit ratings for optimal capital structure decisions. Non-financial Asian listed companies, evaluated by Standard and Poor’s, are selected from 2000 to 2016. Panel data analysis with pooled ordinary least square (OLS), fixed effect (FE),...
Persistent link: https://www.econbiz.de/10011848337