Dual ownership, returns, and voting in mergers

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

“…This is expected, since bidders tend to be larger, be more diversified, and have higher credit ratings. Previous studies find no evidence of such positive returns in domestic M&As for investment-grade targets (Billett et al, 2004;Bodnaruk and Rossi, 2016).…”

“…Lastly, we consider whether the bidding firm has a creditor-shareholder, a bank or other financial institution that both lends to and invest in the firm. This dual holdership phenomenon is well-documented for Continental Europe, but 10% of US shares are also held by creditor-shareholders (Bodnaruk and Rossi, 2016). The influence of a creditor-shareholder may not only make M&As more creditor-friendly, but facilitate access to debt or better credit terms to finance the deal (Jiang et al, 2010).…”

Bank dividends, agency costs and shareholder and creditor rights

“…This result indicates that bondholders perceive such changes either as a signal sent by managers about firm profitability or as a way to prevent empire building, and not as a wealth transfer from creditors to shareholders. Another approach used in the literature to measure the strength of the shareholder-creditor conflict relies on the existence of dual holders who simultaneously hold equity and debt claims of the same firm (Bodnaruk & Rossi, 2016;Jiang et al, 2010). Building on this approach, Chu (2017) shows that firms pay lower dividends when there is diminished conflict between shareholders and creditors; this suggests that the shareholder-creditor conflict leads firms to higher pay outs to the detriment of creditors.…”

The Importance of Blockholder Heterogeneity: Security Market Effects and Follow-On Activities

“…See, e.g., Maxwell and Rao (2003) for spin-offs, Maxwell and Rao (2003) for share repurchases, Penas and Unal (2004) for bank mergers, and Ambrose et al (2012) for fallen angels. Several studies employ 2-or 3-month event windows for mergers and acquisitions (Billett et al (2004)), for leveraged buyouts (Baran and King (2010)), and for mergers (Bodnaruk and Rossi (2016)). Thus, in addition to the return on the filing month, we further calculate bond returns over two additional event windows: (−1, 0) and (−1, 1).…”