Debt Holders and the Choice of Restructuring: Evidence from Dual Holders

38 Pages Posted: 18 May 2021 Last revised: 23 Jan 2022

See all articles by Ali Taatian

Ali Taatian

Stevens Institute of Technology

Date Written: May 15, 2021

Abstract

We find a channel through which debt holders can affect corporate transactions. We show that dual holders (equity holders who also have the firm's debt in their portfolio) are sensitive to a decline in debt value in a leveraged buyout and decrease the likelihood of LBOs. We show that the stock premium in LBO events is higher for a firm with dual holders due to their loss on their debt.

Keywords: leverage buyout, abnormal return, dual holding

JEL Classification: G32, G34

Suggested Citation

Taatian, Ali, Debt Holders and the Choice of Restructuring: Evidence from Dual Holders (May 15, 2021). Available at SSRN: https://ssrn.com/abstract=3847056 or http://dx.doi.org/10.2139/ssrn.3847056

Ali Taatian (Contact Author)

Stevens Institute of Technology ( email )

Hoboken, NJ 07030
United States

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