This paper finds that the initiation of trading in credit default swaps (CDS) improves earnings quality by reducing absolute abnormal earnings accruals through specific channels in CDS firms. CDS initiation brought about more private information discovery via financial analysts, cross-market...

This paper investigates the CDS pricing errors (CPEs) properties. I find that CPEs can significantly predict future CDS returns reversal. Consistent with mispricing channel, the predictability of CPE is particularly strong for CDS contracts with poor liquidities and for periods with high...

We attempt to answer a key question whether credit default swap (CDS) prices and price changes contain private information that are used by informed traders within 24 hours to cross-trade in the related equity market. By disaggregating daily stock return into day (exchange trading hours),...