What is it about?

The purpose of this paper is to show how corporate policy with respect to the seniority structure of debt changes after a merger.

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Why is it important?

The results of this study are consistent with those of many recent studies on capital structure, which find that changes in capital structure tend to persist, and that firms are slow to revert to previous structures after significant changes, such as those that may result from mergers. The paper suggests that there may be an advantage for firms to sell off acquired junior debt after a merger.

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This page is a summary of: Debt seniority and mergers, Managerial Finance, June 2015, Emerald,
DOI: 10.1108/mf-01-2014-0022.
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