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Creditor-control rights and the nonsynchronicity of global CDS markets

Hasan, I., Marra, M., Wu, E. and Zhang, G. (2023) Creditor-control rights and the nonsynchronicity of global CDS markets. The Review of Corporate Finance Studies. ISSN 2046-9136

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To link to this item DOI: 10.1093/rcfs/cfad010


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
Divisions:Henley Business School > ICMA Centre
ID Code:111250
Uncontrolled Keywords:Creditor Rights; Global Corporate CDS; Nonsynchronicity; Creditor-shareholder Conflicts
Publisher:Oxford University Press

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