ScholarWorks@숙명여자대학교

초록

This paper explains a small change in the equity risk of the recapitalization firm by the change in its dividend policy and risk transfer from equityholders to debtholders. The firm that undergoes recapitalization is likely to adopt less aggressive dividend policy after the transactions. A big increase in the transaction turnover after the recapitalizations supports the dividend clientele effect associated with the leveraged transactions. Given the assumption that asset beta does not change, the shift towards less aggressive dividend policy reduces the magnitude of change in equity risk. Risk transfer from equityholders to debtholders is another source of the small increase in equity risk in the leveraged transactions, and is evidenced by the substantial increase in the yield spread of the firms.

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