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Creditor rights, claims enforcement, and bond returns in mergers and acquisitions

Research output: Contribution to journalArticle

This article 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
Pages (from-to)174-194
JournalJournal of International Business Studies (JIBS)
Issue number2
StatePublished - Feb 2017

    Research areas

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