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Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions

Research output: Other research outputDiscussion paper

This paper shows that country-level differences in creditor protection affect bond performance around cross-border M&A announcements. Using Eurobonds and a global sample of 1,100 cross-border M&As, we find that the bondholders of bidding firms respond more positively to deals that expose their firm to a jurisdiction with stronger creditor rights and more efficient claims enforcement through courts. Positive creditor protection spillovers are enhanced by now-global jurisdictional cooperation in multinational insolvencies and creditors’ ability to do insolvency arbitrage. The spillover effects we observe are stronger for firms with higher asset risk, longer maturity bonds, and a higher likelihood of financial distress.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages45
Volume2017-012
StatePublished - 15 Mar 2017

Publication series

NameCentER Discussion Paper
Volume2017-012

    Research areas

  • bondholder value, cross-border mergers and acquisitions (M&As), creditor rights, legal enforcement, eurobonds

Documents

  • 2017-012

    Submitted manuscript, 518 KB, PDF-document

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