Abstract
This article 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 language | English |
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Pages (from-to) | 174-194 |
Journal | Journal of International Business Studies |
Volume | 48 |
Issue number | 2 |
DOIs | |
Publication status | Published - Feb 2017 |
Keywords
- bondholder value
- cross-border mergers and acquisitions (M&As)
- creditor rights
- legal enforcement
- event study
- Eurobonds