The Influence of Creditor Governance on Firms

71 Pages Posted: 18 Jul 2015 Last revised: 28 Jul 2021

See all articles by Marc Arnold

Marc Arnold

University of St. Gallen - School of Finance

Ramona Westermann

Copenhagen Business School

Multiple version iconThere are 2 versions of this paper

Date Written: July 27, 2021

Abstract

This paper develops a model to explore the implications of creditor governance on debt prices and corporate policies. The model incorporates the empirical observation that creditors can influence firms outside corporate distress and not only in distress. We find that considering both distressed and non-distressed creditor interventions is key to investigating how creditors influence firms. The model explains cross-sectional patterns of credit spreads and control premiums that traditional debt renegotiation models do not capture. We also derive novel implications for the impact of firm characteristics associated with renegotiation on debt prices and corporate policies.

Keywords: Debt Renegotiation, Creditor Governance, Debt Pricing

JEL Classification: D92, E44, G12, G32, G33

Suggested Citation

Arnold, Marc and Westermann, Ramona, The Influence of Creditor Governance on Firms (July 27, 2021). University of St.Gallen, School of Finance Research Paper No. 2015/14, Available at SSRN: https://ssrn.com/abstract=2632009 or http://dx.doi.org/10.2139/ssrn.2632009

Marc Arnold

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Ramona Westermann (Contact Author)

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
335
Abstract Views
2,368
rank
100,716
PlumX Metrics