Table E.3 Open in new tab Effects of CDS...

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
CDS Introduction \|$\times$\| Conditioning Variable		0.0031^*	0.0053^***	0.0031	–0.0006	0.0017	–0.0008	–0.0003	–0.0046	0.0023
		(0.0016)	(0.0020)	(0.0019)	(0.0016)	(0.0019)	(0.0019)	(0.0024)	(0.0028)	(0.0018)
Conditioning Variable		–0.0007	–0.0010	–0.0015	–0.0000	0.0007	–0.0031^***	–0.0016	–0.0041^**	0.0017
		(0.0010)	(0.0012)	(0.0011)	(0.0011)	(0.0009)	(0.0011)	(0.0013)	(0.0017)	(0.0011)
CDS Introduction	0.0012	0.0019	0.0021	0.0020	0.0011	0.0011	0.0013	0.0012	0.0028	0.0025
	(0.0017)	(0.0017)	(0.0017)	(0.0017)	(0.0016)	(0.0017)	(0.0018)	(0.0017)	(0.0021)	(0.0021)
Year Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Industry Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Clustered Standard Errors	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm
Observations	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822
Adj. \|$R$\|-Squared	0.263	0.265	0.266	0.264	0.264	0.265	0.268	0.264	0.274	0.267

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

Creditor Rights

Property Rights

Baseline

Creditor Rights

Restriction on Entry

No Automatic Stay

Management Does Not Stay

Secured Creditors First

Law & Order

Corruption

Risk

Political Closely Held Shares

CDS Introduction |$\times$| Conditioning Variable

0.0031^*

0.0053^***

0.0031

–0.0006

0.0017

–0.0008

–0.0003

–0.0046

0.0023

(0.0016)

(0.0020)

(0.0019)

(0.0016)

(0.0019)

(0.0024)

(0.0028)

(0.0018)

Conditioning Variable

–0.0007

–0.0010

–0.0015

–0.0000

0.0007

–0.0031^***

–0.0016

–0.0041^**

0.0017

(0.0010)

(0.0012)

(0.0011)

(0.0009)

(0.0011)

(0.0013)

(0.0017)

(0.0011)

CDS Introduction

0.0012

0.0019

0.0021

0.0020

0.0011

0.0013

0.0012

0.0028

0.0025

(0.0017)

(0.0016)

(0.0017)

(0.0018)

(0.0017)

(0.0021)

Year Fixed Effects

Yes

Industry Fixed Effects

Yes

Clustered Standard Errors

Firm

Observations

80,822

Adj. |$R$|-Squared

0.263

0.265

0.266

0.264

0.265

0.268

0.264

0.274

0.267

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
CDS Introduction \|$\times$\| Conditioning Variable		0.0031^*	0.0053^***	0.0031	–0.0006	0.0017	–0.0008	–0.0003	–0.0046	0.0023
		(0.0016)	(0.0020)	(0.0019)	(0.0016)	(0.0019)	(0.0019)	(0.0024)	(0.0028)	(0.0018)
Conditioning Variable		–0.0007	–0.0010	–0.0015	–0.0000	0.0007	–0.0031^***	–0.0016	–0.0041^**	0.0017
		(0.0010)	(0.0012)	(0.0011)	(0.0011)	(0.0009)	(0.0011)	(0.0013)	(0.0017)	(0.0011)
CDS Introduction	0.0012	0.0019	0.0021	0.0020	0.0011	0.0011	0.0013	0.0012	0.0028	0.0025
	(0.0017)	(0.0017)	(0.0017)	(0.0017)	(0.0016)	(0.0017)	(0.0018)	(0.0017)	(0.0021)	(0.0021)
Year Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Industry Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Clustered Standard Errors	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm
Observations	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822
Adj. \|$R$\|-Squared	0.263	0.265	0.266	0.264	0.264	0.265	0.268	0.264	0.274	0.267

Table E.3

Open in new tab

Effects of CDS on capital investment

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
		Creditor Rights					Property Rights
	Baseline	Creditor Rights	Restriction on Entry	No Automatic Stay	Management Does Not Stay	Secured Creditors First	Law & Order	Corruption	Risk	Political Closely Held Shares
CDS Introduction \|$\times$\| Conditioning Variable		0.0031^*	0.0053^***	0.0031	–0.0006	0.0017	–0.0008	–0.0003	–0.0046	0.0023
		(0.0016)	(0.0020)	(0.0019)	(0.0016)	(0.0019)	(0.0019)	(0.0024)	(0.0028)	(0.0018)
Conditioning Variable		–0.0007	–0.0010	–0.0015	–0.0000	0.0007	–0.0031^***	–0.0016	–0.0041^**	0.0017
		(0.0010)	(0.0012)	(0.0011)	(0.0011)	(0.0009)	(0.0011)	(0.0013)	(0.0017)	(0.0011)
CDS Introduction	0.0012	0.0019	0.0021	0.0020	0.0011	0.0011	0.0013	0.0012	0.0028	0.0025
	(0.0017)	(0.0017)	(0.0017)	(0.0017)	(0.0016)	(0.0017)	(0.0018)	(0.0017)	(0.0021)	(0.0021)
Year Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Industry Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Clustered Standard Errors	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm
Observations	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822
Adj. \|$R$\|-Squared	0.263	0.265	0.266	0.264	0.264	0.265	0.268	0.264	0.274	0.267

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
		Creditor Rights					Property Rights
	Baseline	Creditor Rights	Restriction on Entry	No Automatic Stay	Management Does Not Stay	Secured Creditors First	Law & Order	Corruption	Risk	Political Closely Held Shares
CDS Introduction \|$\times$\| Conditioning Variable		0.0031^*	0.0053^***	0.0031	–0.0006	0.0017	–0.0008	–0.0003	–0.0046	0.0023
		(0.0016)	(0.0020)	(0.0019)	(0.0016)	(0.0019)	(0.0019)	(0.0024)	(0.0028)	(0.0018)
Conditioning Variable		–0.0007	–0.0010	–0.0015	–0.0000	0.0007	–0.0031^***	–0.0016	–0.0041^**	0.0017
		(0.0010)	(0.0012)	(0.0011)	(0.0011)	(0.0009)	(0.0011)	(0.0013)	(0.0017)	(0.0011)
CDS Introduction	0.0012	0.0019	0.0021	0.0020	0.0011	0.0011	0.0013	0.0012	0.0028	0.0025
	(0.0017)	(0.0017)	(0.0017)	(0.0017)	(0.0016)	(0.0017)	(0.0018)	(0.0017)	(0.0021)	(0.0021)
Year Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Industry Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Clustered Standard Errors	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm	Firm
Observations	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822	80,822
Adj. \|$R$\|-Squared	0.263	0.265	0.266	0.264	0.264	0.265	0.268	0.264	0.274	0.267

The table shows the average treatment effect of CDS introductions on the capital investment (defined as capital expenditures divided by total assets) of the treated firms (ATET) using overlap weights (Li, Morgan, and Zaslavsky 2018). The treatment is the introduction of CDS (i.e., only the first year of CDS trading for each firm). The regressions further include CDS interaction effects with lagged (standardized) conditioning variables, as well as the lagged conditioning variables themselves. The use of overlap weights ensures that covariates are perfectly balanced between treated firms and control firms in the year before treatment (see Table E.2 in Appendix E). Conditioning variables are grouped into three categories: (1) creditor rights, (2) property rights, and (3) equity ownership concentration. For creditor rights, we use an aggregate index (Creditor Rights) as well as its four subindexes, namely, restrictions on a firm entering reorganization without creditors’ consent (Restrictions on Entry); no automatic stay or asset freeze (No Automatic Stay); restriction on management’s administration of a firm’s assets pending resolution of the reorganization (Management Does Not Stay); and payment of secured creditors first out of any liquidation proceeds (Secured Creditors First). For property rights, we consider the following three measures: Law & Order, Corruption, and Political Risk, where higher index values indicate stronger protection for private properties. For equity ownership concentration, we use the percentage of closely held shares (Closely Held Shares). All regressions include year and Fama-French 48-industry fixed effects. Standard errors are clustered at the firm level and are reported in parentheses. The sample consists of an unbalanced panel of more than 56,000 nonfinancial firms across 51 countries over the period 2001–2015. Market data are from Datastream; accounting data are from WorldScope; and CDS data are from Markit. All variables are defined in Appendix D. *|$p <.1$|⁠; **|$p <.05$|⁠; ***|$p <.01$|⁠.

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