Wealth transfer between owners and lenders of European stock corporations
Open Access
- 16 February 2017
- journal article
- Published by Virtus Interpress in Corporate Ownership and Control
- Vol. 14 (2), 147-164
- https://doi.org/10.22495/cocv14i2c1p1
Abstract
Wealth transfer effects between company owners and lenders based on changes in a firm’s credit rating have primarily been examined a) for one type of security; b) on U.S. capital markets; and c) by applying standard event study methods. In contrast to these studies, we compared the price effects of stocks and corporate bonds of the same issuer using robust event study methods. Our findings indicated that downgrades cause negative price effects for owners and lenders of European firms, whereas upgrades only induced positive price effects for lenders. However, we did not find evidence for the existence of wealth transfer effects between owners and lenders on European capital markets.Keywords
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