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Bank Dependence and Bank Financing in Corporate M&A

We examine the valuation impact of bank-financed mergers and acquisitions (M&As) and the loan contracts used to finance M&A transactions, focusing on the difference between bank-dependent acquirers and other acquirers. We find that bank-financed deals have higher acquirer’s cumulative abnormal returns relative to other cash M&A deals, but this certification effect exists only for bank-dependent acquirers. Despite bank-dependent acquirers being more susceptible to hold-up, banks do not impose higher loan pricing or more stringent nonprice terms on them. After completion of the acquisition, bank-dependent acquirers retain the M&A financing banks for a much larger share of their borrowing needs, suggesting the importance of repeat business for lack of hold-up. Our findings highlight the positive aspects of bank dependence and the importance of implicit contracting for the lack of hold-up in lending markets.

Ketersediaan

Informasi Detail

Judul Seri

MANAGEMENT SCIENCE; Vol.68 No.3 March 2022

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 2250-2283

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

BANK FINANCING
CREDITOR MONITORING
M&A
BANK DEPENDENCE

Info Detail Spesifik

https://doi.org/10.1287/mnsc.2020.3947

Pernyataan Tanggungjawab

Sheng Huang, Ruichang Lu, Anand Srinivasan

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