TY - JOUR
T1 - The value of access to finance
T2 - Evidence from M&As
AU - Cornaggia, Jess
AU - Li, Jay Yin
N1 - Funding Information:
We thank the editor, Bill Schwert, and the referee, Heitor Almeida, whose suggestions significantly improved the paper. For helpful comments, we thank Aziz Alimov, Zhe An, Andriy Bodnaruk, Kimberly Cornaggia, Ran Duchin, Daniel Greene, Florian Heider, Jarrad Harford, Cici Huang, Jonathan Kalodimos, Kai Li, Rose Liao, David Moore, Lee Pinkowitz, Merih Sevilir, Yaxuan Qi, Rohan Williamson, Yong Wang, Margret Zhu, and seminar participants at the City University of Hong Kong, Georgetown University, Hong Kong University, Oregon State University, University of Oregon, China International Conference in Finance 2015, Financial Management Association Meeting 2015, Auckland Finance Meeting 2016, and Financial Management Association Asia/Pacific Meeting 2017. Jay Y. Li acknowledges financial support from the City University of Hong Kong Startup Grants. We thank Ang Li for excellent research assistance. All errors are ours.
Publisher Copyright:
© 2018
PY - 2019/1
Y1 - 2019/1
N2 - We examine synergies in mergers and acquisitions (M&As) generated by firms’ comparative advantages in access to bank finance. We find robust evidence that greater access to bank finance increases firms’ attractiveness as acquisition targets. Targets’ comparative advantage in bank finance improves bank credit supply and reduces financing costs for the merged firms. These effects are more pronounced for acquirers with greater frictions in accessing bank loans and acquirers with greater growth opportunities. Overall, this paper reveals that targets, not just acquirers, contribute to financial synergies in M&As.
AB - We examine synergies in mergers and acquisitions (M&As) generated by firms’ comparative advantages in access to bank finance. We find robust evidence that greater access to bank finance increases firms’ attractiveness as acquisition targets. Targets’ comparative advantage in bank finance improves bank credit supply and reduces financing costs for the merged firms. These effects are more pronounced for acquirers with greater frictions in accessing bank loans and acquirers with greater growth opportunities. Overall, this paper reveals that targets, not just acquirers, contribute to financial synergies in M&As.
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U2 - 10.1016/j.jfineco.2018.09.003
DO - 10.1016/j.jfineco.2018.09.003
M3 - Article
AN - SCOPUS:85048973708
SN - 0304-405X
VL - 131
SP - 232
EP - 250
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 1
ER -