Debt and Hybrid Decoupling: An Overview

M&A Lawyer, Vol. 1, pp. 4-10, April 2008

8 Pages Posted: 8 May 2008

Date Written: April 1, 2008

Abstract

This is a summary, practitioner-oriented article which summarizes our research on debt and hybrid decoupling. Equity decoupling refers to the unbundling of the rights and obligations normally associated with shares. Debt decoupling refers to the unbundling of the economic and governance rights normally associated with debt, often through credit derivatives or securitization. Hybrid decoupling involves combined debt and equity positions. All forms appear to be growing in importance. Debt and hybrid decoupling pose risks for debt governance - the relationship between creditors and debtors, including creditors' exercise of their contractual and legal governance rights. Widespread debt decoupling can also involve externalities and contribute to systemic financial risks.

The full academic version of this Article is Debt, Equity, and Hybrid Decoupling, European Financial Management, vol. 14, forthcoming 2008, available at http://ssrn.com/abstract=1084075

For an earlier, finance-oriented academic article on equity decoupling, see:

Hedge Funds, Insiders, and the Decoupling of Economic and Voting Ownership: Empty Voting and Hidden (Morphable) Ownership, , Journal of Corporate Finance, Vol. 13, 2007, pp. 343-367, nearly final version available at http://ssrn.com/abstract=874098

For our principal law-oriented academic articles on equity and debt decoupling, see:

Equity and Debt Decoupling and Empty Voting II: Importance and Extensions, University of Pennsylvania Law Review, Vol. 156, 2008, pp. 625-739, available at http://ssrn.com/abstract=1030721

The New Vote Buying: Empty Voting and Hidden Ownership, Southern California Law Review, Vol. 79, 2006, pp. 811-908, available at http://ssrn.com/abstract=904004

Keywords: corporate governance, derivatives, equity swaps, hedge funds, shareholder voting, vote buying

JEL Classification: G14, G18, G20, G24, G28, G30, G32, G34, K22, L20

Suggested Citation

Hu, Henry T. C. and Black, Bernard S., Debt and Hybrid Decoupling: An Overview (April 1, 2008). M&A Lawyer, Vol. 1, pp. 4-10, April 2008. Available at SSRN: https://ssrn.com/abstract=960512

Henry T. C. Hu

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1373 (Phone)
512-471-6988 (Fax)

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

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