The value of access to finance : Evidence from M&As

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)232-250
Journal / PublicationJournal of Financial Economics
Volume131
Issue number1
Online published14 Sep 2018
Publication statusPublished - Jan 2019

Abstract

We examine synergies in mergers and acquisitions (M&As) generated by firms’ comparative advantages in access to bank finance. We find robust evidence that greater access to bank finance increases firms’ attractiveness as acquisition targets. Targets’ comparative advantage in bank finance improves bank credit supply and reduces financing costs for the merged firms. These effects are more pronounced for acquirers with greater frictions in accessing bank loans and acquirers with greater growth opportunities. Overall, this paper reveals that targets, not just acquirers, contribute to financial synergies in M&As.

Research Area(s)

  • M&A, Access to finance, Financial synergy

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