Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions

Luc Renneboog, Peter Szilagyi, Cara Vansteenkiste

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper shows that country-level differences in creditor protection affect bond performance around cross-border M&A announcements. Using Eurobonds and a global sample of 1,100 cross-border M&As, we find that the bondholders of bidding firms respond more positively to deals that expose their firm to a jurisdiction with stronger creditor rights and more efficient claims enforcement through courts. Positive creditor protection spillovers are enhanced by now-global jurisdictional cooperation in multinational insolvencies and creditors’ ability to do insolvency arbitrage. The spillover effects we observe are stronger for firms with higher asset risk, longer maturity bonds, and a higher likelihood of financial distress.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages45
Volume2017-012
Publication statusPublished - 15 Mar 2017

Publication series

NameCentER Discussion Paper
Volume2017-012

Fingerprint

Mergers and acquisitions
Enforcement
Creditor rights
Cross-border
Financial distress
Arbitrage
Announcement
Maturity
Spillover
Eurobonds
Bidding
Multinationals
Jurisdiction
Assets
Spillover effects
Insolvency
Bondholders

Keywords

  • bondholder value
  • cross-border mergers and acquisitions (M&As)
  • creditor rights
  • legal enforcement
  • eurobonds

Cite this

Renneboog, L., Szilagyi, P., & Vansteenkiste, C. (2017). Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions. (CentER Discussion Paper; Vol. 2017-012). Tilburg: CentER, Center for Economic Research.
Renneboog, Luc ; Szilagyi, Peter ; Vansteenkiste, Cara. / Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions. Tilburg : CentER, Center for Economic Research, 2017. (CentER Discussion Paper).
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Renneboog, L, Szilagyi, P & Vansteenkiste, C 2017 'Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions' CentER Discussion Paper, vol. 2017-012, CentER, Center for Economic Research, Tilburg.

Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions. / Renneboog, Luc; Szilagyi, Peter; Vansteenkiste, Cara.

Tilburg : CentER, Center for Economic Research, 2017. (CentER Discussion Paper; Vol. 2017-012).

Research output: Working paperDiscussion paperOther research output

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Renneboog L, Szilagyi P, Vansteenkiste C. Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions. Tilburg: CentER, Center for Economic Research. 2017 Mar 15. (CentER Discussion Paper).