Corporate Restructuring and Bondholder Wealth

TILEC Discussion Paper No. 2006-007

ECGI - Finance Working Paper No. 124/2006

29 Pages Posted: 2 May 2006

See all articles by Peter G. Szilagyi

Peter G. Szilagyi

EDHEC Business School

Luc Renneboog

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 2006


This paper provides an overview of existing research on how corporate restructuring affects the wealth of creditors. Restructuring is defined as any transaction that affects the firm's 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. The analysis identifies significant gaps in the literature, emphasizes the potential differences between creditor wealth changes in market- and network-oriented governance systems, and provides valuable insights into methodological advances. Many issues obviously remain, as empirical evidence is still incomplete and focuses exclusively on the US. In network-oriented regimes, the potential for research remains constrained by the lesser development of bond markets that disclose information on creditor wealth shocks. Still, on-going debt securitization should now allow for the investigation of at least some critical issues. This is imperative, as the position of creditors in the firm differs substantially across governance systems despite the gradual convergence of these regimes across the world.

Keywords: Bondholder wealth, corporate restructuring, mergers and acquisitions, event studies, bond returns

JEL Classification: G12, G14, G34, G35

Suggested Citation

Szilagyi, Peter G. and Renneboog, Luc, Corporate Restructuring and Bondholder Wealth (March 2006). TILEC Discussion Paper No. 2006-007, ECGI - Finance Working Paper No. 124/2006, Available at SSRN: or

Peter G. Szilagyi

EDHEC Business School ( email )

24 Av. Gustave Delory
Roubaix, 59057

Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE

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