Journal of Corporate Finance Vol. 67 2021
Loan price in mergers and acquisitions
Abstract
We investigate loan price in mergers and acquisitions (M&As), using hand-matched loan information for a sample of 512 U.S. M&A transactions. We find the relative size of a deal constitutes a prominent determinant of the loan price measured by the all-in spread drawn (AISD). This result is robust to several specifications that address endogeneity concerns. Cross-sectional analyses show that aggravated credit risk and information uncertainty after M&A go some way towards explaining lenders' concerns over large relative deal size. Further analysis demonstrates higher AISD is associated with lower post-transaction performance, indicating loan price factors in the risk of poor post-transaction performance correctly.
- DOI
- 10.1016/j.jcorpfin.2020.101754
- Volume
- 67
- Pages
- 101754
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib