Bond market access and acquisitions: empirical evidence from the European market

Magnus Blomkvist (), Teemu Friman and Timo Korkeamäki ()
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Magnus Blomkvist: Audencia Business School
Teemu Friman: Hanken School of Economics - Hanken School of Economics
Timo Korkeamäki: Hanken School of Economics - Hanken School of Economics

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Abstract: We investigate whether access to bond markets affects acquisition activity of the European firms between 1999 and 2014. Our study provides insight into the effect that the growing European bond market has on corporate investment activity. We find that access to the bond markets, measured by the existence of a credit rating, has a significant effect on the tendency of firms to make acquisitions. The effect is strongest in Continental Europe and during times of high acquisition activity. We further find that consistent with prior U.S. evidence, bond market access has an inverse effect on abnormal returns generated by the acquisitions. That finding suggests that firms with superior access to financing pursue targets of lesser quality.

Keywords: Restructuring; Corporate governance; Mergers; Acquisitions (search for similar items in EconPapers)
Date: 2018-03-20
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Citations: View citations in EconPapers (2)

Published in European Journal of Finance, 2018, 24 (6), pp.478 - 498. ⟨10.1080/1351847X.2017.1323771⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01738677

DOI: 10.1080/1351847X.2017.1323771

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