Question: Some argue that if two firms merge and thus decrease the probability of default on their debt, the stockholders are actually hurt, since they have

Some argue that if two firms merge and thus decrease the probability of default on their debt, the stockholders are actually hurt, since they have assumed some of the risk previously borne by the bondholders. Why might non-owner managers of a firm be motivated to transfer risk from bondholders to stockholders in this manner?

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