WEALTH TRANSFER BETWEEN OWNERS AND LENDERS OF EUROPEAN STOCK CORPORATIONSDownload This Article
Andreas Horsch, Steffen Hundt, Björn Sprungk
Wealth transfer effects between company owners and lenders based on changes in a firm’s credit rating have primarily been examined a) for one type of security; b) on U.S. capital markets; and c) by applying standard event study methods. In contrast to these studies, we compared the price effects of stocks and corporate bonds of the same issuer using robust event study methods. Our findings indicated that downgrades cause negative price effects for owners and lenders of European firms, whereas upgrades only induced positive price effects for lenders. However, we did not find evidence for the existence of wealth transfer effects between owners and lenders on European capital markets.
Keywords: Credit Ratings, Event Study, Rating Agencies, Wealth Transfer Effects, Robust Regression
JEL classification: G14, G15, G24, G32, G34
Date received: 11 October 2016
Date accepted: 5 January 2017
How to cite this paper: Hundt, S., Sprungk, B., & Horsch, A. (2017). Wealth transfer between owners and lenders of European stock corporations. Corporate Ownership & Control, 14(2-1), 147-164. http://doi.org/10.22495/cocv14i2c1p1