2024/04/02 by Nadia Massoud, Keke Song, Nam Tran · 1 voice
Business, Management and Accounting · Economics, Econometrics and Finance · #Accounting #Banking stability, regulation, efficiency #Business #Corporate Finance and Governance #Corporate governance #Econometrics #Economics #Finance #Financial system #Instrumental variable #Loan #Mergers and acquisitions #Monetary economics #Natural experiment #Private Equity and Venture Capital #Quality (philosophy) #Shareholder #Value (mathematics)
paper · doi:10.1016/j.jbankfin.2024.107171
openalex publication_date 2024/04/02 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/22
We employ textual analysis to identify mergers and acquisitions (M&As) financed by corporate loans and show that acquirer announcement returns are higher in loan-financed M&As. Utilizing an instrumental variable approach and a quasi-natural experiment, we provide evidence that lenders contribute to the higher acquirer returns in loan-financed M&As. Our findings support the view that lenders differ in their ability to screen and monitor borrowers and that their ability is persistent. We also find evidence that lenders’ participation in the M&A market can resolve uncertainty about M&A deal quality, improve corporate governance by preventing value-destroying M&As, and provide long-term monitoring benefits to acquirer shareholders.