Sammanfattning
We investigate how loan covenants associated with potential target firms affect takeover deals. We propose two possible channels. Under a discipline channel, the target firm becomes an attractive candidate for takeovers and merger deals are facilitated. Under a constraint channel, covenants hinder merger activity. We find support for the latter channel. Takeover likelihood is lower, deal failures are more common, the likelihood of price renegotiation is higher, and acquisition premium is lower when the target is bound by covenants. Covenant tightness exacerbates this effect.
Originalspråk | Engelska |
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Artikelnummer | 102711 |
Referentgranskad vetenskaplig tidskrift | Finance Research Letters |
Volym | 47 |
Nummer | B |
ISSN | 1544-6123 |
DOI | |
Status | Publicerad - 06.06.2022 |
MoE-publikationstyp | A1 Originalartikel i en vetenskaplig tidskrift |
Nyckelord
- 512 Företagsekonomi
Styrkeområden och områden med hög potential (AoS och AoHP)
- AoS: Finansiering, redovisning och företagsstyrning