Poison Bonds
Rex Wang Renjie, Shuo Xia
IWH Discussion Papers,
No. 3,
2024
Abstract
This paper documents the rise of “poison bonds”, which are corporate bonds that allow bondholders to demand immediate repayment in a change-of-control event. The share of poison bonds among new issues has grown substantially in recent years, from below 20% in the 90s to over 60% since mid-2000s. This increase is predominantly driven by investment-grade issues. We provide causal evidence that the pressure to eliminate poison pills has led firms to issue poison bonds as an alternative. Our analysis suggests that this practice entrenches incumbent managers and destroys shareholder value. Holding a portfolio of firms that remove poison pills but promptly issue poison bonds results in negative abnormal returns of −7.3% per year. Our findings have important implications for the agency theory of debt: (i) more debt may not discipline the management; and (ii) even without financial distress, managerial entrenchment can lead to agency conflicts between shareholders and creditors.
Read article
Gender Pay Gap in American CFOs: Theory and Evidence
Bill Francis, Iftekhar Hasan, Gayane Hovakimian, Zenu Sharma
Journal of Corporate Finance,
June
2023
Abstract
Studies document persistent unexplained gender-based wage gap in labor markets. At the executive level, where skill and education are similar, career interruptions and differences in risk preferences primarily explain the extant gender-based pay gap. This study focuses on CFO compensation contracts of Execucomp firms (1992–2020) and finds no gender-based pay gap. This paper offers several explanations for this phenomenon, such as novel evidence on the risk preferences of females with financial expertise and changes in the social and regulatory climate.
Read article
Postdoctoral Researcher in Financial Economics (f/m/x, 100%) [2023-06]
Vacancy Postdoctoral Researcher in Financial Economics (f/m/x,...
See page
PostDoc Position in the Department of Laws, Regulations and Factor Markets (100%) (f/m/x) [2024-02]
Vacancy PostDoc Position (100%) (f/m/x) [2024-02] ...
See page
Student assistant (f/m/x) for 40‒60 hours a month (Financial Markets)
Vacancy Student assistant (f/m/x) for 40‒60 hours a month ...
See page
Joint Economic Forecast
Joint Economic Forecast The joint economic forecast is an instrument for evaluating...
See page
IWH European Real Estate Index
IWH European Real Estate Index The IWH European Real Estate Database is a new data...
See page
Financial Stability
Financial Systems: The Anatomy of the Market Economy How the financial system is...
See page
IWH FDI Micro Database
IWH FDI Micro Database The IWH FDI Micro Database (FDI = Foreign Direct...
See page