Credit supply, post-acquisition performance and financial constraints

Magnus Blomkvist, Karl Felixson

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We study the effect of credit supply on the acquisition behaviour of financially constrained (FC) and financially unconstrained (UC) firms. FC firms are likely to conduct acquisitions when credit supply is greater while UC firms can conduct acquisitions whenever a good opportunity arises. We argue that the flexibility unconstrained firms have is valuable. Our empirical results indicate that UC firms outperform FC firms up to 36 months after the acquisition. We also find that increased credit supply increases the probability of conducting mergers and acquisitions (M&As) for FC firms while it has less impact on M&A behaviour of UC firms.
Original languageEnglish
Peer-reviewed scientific journalApplied Economics Letters
Volume25
Issue number20
Pages (from-to)1421-1425
Number of pages5
ISSN1350-4851
DOIs
Publication statusPublished - 05.01.2018
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics
  • Mergers and acquisitions
  • financial constraints
  • financial flexibility
  • post-acquisition performance

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