Lender Effects on Gains from Mergers and Acquisitions

59 Pages Posted: 30 Oct 2019

See all articles by Nadia Massoud

Nadia Massoud

Melbourne Business School, University of Melbourne

Keke Song

Melbourne Business School, the University of Melbourne

Nam Tran

University of Melbourne - Melbourne Business School

Multiple version iconThere are 2 versions of this paper

Date Written: October 10, 2019

Abstract

This paper employs a new approach to identify merger and acquisition (M&A) transactions financed by syndicated loans and provides evidence that acquirer announcement returns are higher in loan-financed M&A deals than in other deals. Utilizing an instrumental variable approach and a quasi-natural experiment, we provide evidence that lenders contribute to the higher acquirer announcement returns in loan-financed M&A deals. Lenders’ performance in M&A financing is persistent over time. Lenders’ participation in the M&A market can resolve uncertainty about the M&A deal quality, improve corporate governance by preventing value-destroying M&A transactions, and provide long-term monitoring benefits to acquirer shareholders.

Keywords: M&As, syndicated loan, corporate governance, lending relationship, uncertainty resolution, lender ability, FAS 166/167

JEL Classification: G14, G34, G21, D82

Suggested Citation

Massoud, Nadia and Song, Keke and Tran, Nam, Lender Effects on Gains from Mergers and Acquisitions (October 10, 2019). Available at SSRN: https://ssrn.com/abstract=3472771 or http://dx.doi.org/10.2139/ssrn.3472771

Nadia Massoud

Melbourne Business School, University of Melbourne ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia
+61 3 9349 8130 (Phone)
+61 3 9349 8136 (Fax)

HOME PAGE: http://mbs.edu/facultyresearch/facultydirectory/Pages/NadiaMassoud.aspx

Keke Song (Contact Author)

Melbourne Business School, the University of Melbourne ( email )

200 Leicester Steet
Carlton, 3053
Australia

Nam Tran

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
170
Abstract Views
1,209
Rank
268,682
PlumX Metrics