Information Transmission between Banks and the Market for Corporate Control

Christian Bittner, Falko Fecht, Melissa Pala and Farzad Saidi
Additional contact information
Christian Bittner: Deutsche Bundesbank and Goethe University Frankfurt
Melissa Pala: Deutsche Bundesbank
Farzad Saidi: University of Bonn and CEPR

No 250, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: This paper provides evidence of deliberate private-information disclosure within banks' international business networks. Using supervisory trade-level data, we show that banks with closer ties to a target advisor in a takeover buy more stocks of the target firm prior to the deal announcement, enabling them to benefit from the positive announcement return. We do not find such effects for bank connections to acquirer advisors or for trades in acquirer stocks. Target advisors benefit from leaking information about takeover bids to connected banks, as it drives up the premium paid without compromising the probability of bid success.

Keywords: bank networks; trading; information spillovers; mergers and acquisitions; syndicated lending (search for similar items in EconPapers)
JEL-codes: G11 G15 G21 G24 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2023-08
New Economics Papers: this item is included in nep-ban and nep-mac
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_250_2023.pdf First version, 2023 (application/pdf)

Related works:
Working Paper: Information Transmission between Banks and the Market for Corporate Control (2023)
Working Paper: Information transmission between banks and the market for corporate control (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:250

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