Creditor rights and corporate risk-taking

• 成果类型: Article
• 署名作者: Acharya, Viral V.; Amihud, Yakov; Litov, Lubomir
• 署名单位: New York University; Centre for Economic Policy Research - UK; European Corporate Governance Institute; National Bureau of Economic Research; Washington University (WUSTL)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2011.04.001
• 发表日期: 2011
• 页码: 150-166
• 关键词: Bankruptcy code; Corporate reorganization; INVESTMENT; diversification

摘要

We propose that stronger creditor rights in bankruptcy affect corporate investment choice by reducing corporate risk-taking. In cross-country analysis, we find that stronger creditor rights induce greater propensity of firms to engage in diversifying acquisitions that are value-reducing, to acquire targets whose assets have high recovery value in default, and to lower cash-flow risk. Also, corporate leverage declines when creditor rights are stronger. These relations are usually strongest in countries where management is dismissed in reorganization and are also observed over time following changes in creditor rights. Our results thus identify a potentially adverse consequence of strong creditor rights. (C) 2011 Elsevier B.V. All rights reserved.