Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150010
Authors: 
Colonnello, Stefano
Year of Publication: 
2017
Series/Report no.: 
IWH Discussion Papers 6/2017
Abstract: 
I study the relation between internal governance and creditor governance. A deterioration in creditor governance may increase the agency costs of debt and managerial opportunism at the expense of shareholders. I exploit the introduction of credit default swaps (CDS) as a negative shock to creditor governance. I provide evidence consistent with shareholders pushing for a substitution effect between internal governance and creditor governance. Following CDS introduction, CDS firms reduce managerial risk-taking incentives relative to other firms. At the same time, after the start of CDS trading, CDS firms increase managerial wealth-performance sensitivity, board independence, and CEO turnover performance-sensitivity relative to other firms.
Subjects: 
creditor governance
credit default swaps
empty creditors
JEL: 
G32
G34
Document Type: 
Working Paper

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