Gains in bank mergers: evidence from the bond markets

Article Abstract:

The effects of corporate mergers in synergistic and nonsynergistic mergers are examined. The two complex issues in bank mergers are that the combined bank is too big to fail (TBTF) for the federal deposit insurer, and secondly the bank being subjected to regulator capital requirements when compared to nonfinancial firms. The credit spreads of the acquiring banks on new debt issues before and after the merger are studied. The results show that bondholders of the merging banks realize positive returns from the bonds that are significant across pre-merger and announcement months.

Acquisitions & mergers, Mergers, acquisitions and divestments, Company acquisition/merger, Credit market, Credit markets

---

Seniority and maturity of debt contracts

Article Abstract:

Borrowers view long-term debt as junior, because if they regarded short-term debt in this way, they would cut the quantity of debt available for refinancing, and their aim is both to refinance and maintain control. Leveraged buyouts (LBOs) function in a similar way, with managers able to use private data to select debt structures. The debt structure of a company in difficulties is an important factor in deciding whether it is to be liquidated. However the model does not imply that banks are over-eager to impose liquidation.

Methods, Study and teaching, Leveraged buyouts

---

Founding family ownership and the agency cost of debt

Article Abstract:

The influence of founding family ownership on the agency cost of debt is discussed. Bondholders perceive that the founding family ownership as a organization structure better protects their interests.

United States, Management dynamics, Management, Company business management, Bondholders

Similar abstracts:

• Abstracts: Inflation, real interest rates, and the bond market: a study of UK nominal and index-linked government prices
• Abstracts: Do monetary unions make economic sense? Evidence from the Scandinavian Currency Union, 1873-1913. Wage rivalry and insider-outsider relations: evidence for skilled and unskilled men in Denmark
• Abstracts: Hierarchies of beliefs and common knowledge. Matching with noise and the acceptance curse
• Abstracts: Trading forward in an imperfect market: the case of electricity in Britain. Spot market competition in the UK electricity industry
• Abstracts: Indexing inventors: the 'sources of investion' revisited. Labor market institutions, liquidity constraints, and macroeconomic stability

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.