Companies with credit default swap (CDS) positions on their debt are not consistently more likely to default, but there is a higher probability of default for these firms in recent years. Firms trading in the CDS market had a higher expected default frequency during 2004-08. This suggests that conflicts between hedged creditors and debtors could increase the likelihood of corporate default. Additionally, institutional ownership exposure is linked to corporate distress, with CDS firms facing stronger selling pressures during financial turmoil.