Creditor-control rights and the nonsynchronicity of global CDS markets

Hasan, I., Marra, M. ORCID: https://orcid.org/0000-0003-0810-7323, Wu, E. and Zhang, G. (2025) Creditor-control rights and the nonsynchronicity of global CDS markets. The Review of Corporate Finance Studies, 14 (1). pp. 204-260. ISSN 2046-9136 doi: 10.1093/rcfs/cfad010

Abstract/Summary

We analyze how creditor rights affect the nonsynchronicity of global corporate credit default swap spreads (CDS-NS). CDS-NS is negatively related to the country-level creditor-control rights, especially to the “Restrictions on reorganization” component, where creditor-shareholder conflicts are high. The effect is concentrated in firms with high investment intensity, asset growth, information opacity, and risk. Pro-creditor bankruptcy reforms led to a decline in CDS-NS, indicating lower firm-specific idiosyncratic information being priced in credit markets. A strategic-disclosure incentive among debtors avoiding creditor intervention seems more dominant than the disciplining effect, suggesting how strengthening creditor rights affects power rebalancing between creditors and shareholders.

Item Type	Article
URI	https://reading-pure-test.eprints-hosting.org/id/eprint/111250
Identification Number/DOI	10.1093/rcfs/cfad010
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting Central Services
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