Corporate Restructuring and Bondholder Wealth

28 Pages Posted: 14 Aug 2008

See all articles by Luc Renneboog

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Peter G. Szilagyi

Central European University

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This paper provides an overview of existing research on how corporate restructuring affects bondholder wealth. Restructuring is defined as any transaction which affects the firm's riskiness by changing its underlying capital structure. Thus, it reaches well beyond asset restructuring and includes transactions such as leveraged buyouts, security issues and exchanges, and the issuance of stock options. We identify significant gaps in the literature, emphasize the potential differences in bond performance between market- and stakeholder-oriented corporate governance systems, and provide valuable insights into methodological advances. We find that many issues remain as the empirical evidence is often inconclusive and focuses almost exclusively on the US. Research on other countries remains constrained by the lesser development of their bond markets, but is equally imperative because the position and bargaining power of creditors vis-à-vis the firm differ substantially across countries and governance regimes.

Suggested Citation

Renneboog, Luc and Szilagyi, Peter G., Corporate Restructuring and Bondholder Wealth. European Financial Management, Vol. 14, Issue 4, pp. 792-819, September 2008, Available at SSRN: or

Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

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5000 LE Tilburg
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European Corporate Governance Institute (ECGI)

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Tilburg Law and Economics Center (TILEC)

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Peter G. Szilagyi

Central European University ( email )

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Budapest, 1051
+36-1-887-5092 (Phone)
+36-1-887-5005 (Fax)


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