3. Mergers and Debt Seniority. We study the seniority structure of debt for corporations undergoing mergers. We find that acquiring firms do not try to maintain their previous seniority structures after the merger, or to return to them quickly, in spite of the advantages that can be obtained by maintaining an optimal seniority structure of debt. This is consistent with evidence from recent studies that find that changes in capital structure tend to persist, and that firms are slow to revert to previous structures after shocks, such as those that may result from mergers.By contrast, bid-ask spreads in the equity markets are typically well under five percent.4 Motivated by this discovery, in this paper we investigate (1) how significant the implication of such large bid-ask spreads in CDS quotes is on a companya#39;sanbsp;...
|Title||:||Essays in the Economics of Fixed Income Securities|
|Publisher||:||ProQuest - 2008|