Impact of credit default swaps on firms' operational efficiency

• 成果类型: Article
• 署名作者: Qiu, Liangfei; Liu, Ruiqi; Jin, Yong; Ding, Chao; Fan, Yangyang; Yeung, Andy C. L.
• 署名单位: State University System of Florida; University of Florida; Hong Kong Polytechnic University; University of Hong Kong; Hong Kong Polytechnic University
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13788
• 发表日期: 2022
• 页码: 3611-3631
• 关键词: Credit default swaps; financial innovations; institutional monitoring; Operational efficiency; Supply Chain Finance

摘要

As one of the most important financial innovations in the last two decades, credit default swap (CDS) contracts have been initiated and actively traded in the market to hedge against credit risks. However, little is known about how these financial innovations affect an underlying firm's operations. In this empirical study, we find that an underlying firm's operational efficiency is significantly improved with the inception of CDS trading. Our results are robust to multiple causal identification strategies. Further analysis suggests that the inception of CDS tends to enhance the operational efficiency of a firm through the supply chain financing capability and trade credit. We also postulate that CDS leads to enhanced efficiency through institutional monitoring and improvements in management effectiveness. We then obtain suggestive evidence. Our findings have direct implications concerning the ongoing policy debate surrounding CDS. We contribute to operations management research by exploring how innovations in the financial market would, in turn, affect the operational performance of firms.