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.
|Titolo:||Internal Governance and Creditor Governance: Evidence from Credit Default Swaps|
COLONNELLO, Stefano (Corresponding)
|Data di pubblicazione:||2017|
|Appare nelle tipologie:||7.01 Working paper|
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|cds_governance_wp.pdf||Working paper||Documento in Pre-print||Accesso chiuso-personale||Riservato|