The Review of Corporate Finance Studies Vol. 14 No. 1 2025

Creditor-Control Rights and the Nonsynchronicity of Global CDS Markets

Iftekhar Hasan^1,2,3; Miriam Marra⁴; Eliza Wu⁵; Gaiyan Zhang⁶

¹ Fordham University · ² Bank of Finland · ³ University of Sydney · ⁴ Henley Business School, University of Reading , · ⁵ University of Sydney Business School, University of Sydney , · ⁶ College of Business Administration, University of Missouri–St. Louis

Abstract

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.

DOI

10.1093/rcfs/cfad010

Volume

14

Issue

1

Pages

204-260

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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