Loan price in Mergers and AcquisitionsCitation formats

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Loan price in Mergers and Acquisitions. / Gao, Ning; Hua, Chen; Khurshed, Arif.

Revise & Resubmit, 2019.

Research output: Working paper

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@techreport{f8512ca0adbe4433b6ce3c62edf6a28c,
title = "Loan price in Mergers and Acquisitions",
abstract = "We investigate loan price in mergers and acquisitions (M&As), using hand-matched loan infor­mation for a sample of 512 U.S. M&A transactions. We find the relative size of a deal constitutes a prominent determinant of the loan price measured by the all-in-drawn spread (AIDS). This result is robust to several specifications that address endogeneity concerns. Further analysis demonstrates higher AIDS is associated with lower post-transaction performance. We posit that deal size is a major concern for lenders because it involves greater information risk, greater busi­ness complexity, and more integration difficulties. Further, the loan price correctly factors in the risk of poor post-transaction performance. ",
keywords = "loan price, mergers and acquisitions (M&As), relative deal size, post-acquisition performance",
author = "Ning Gao and Chen Hua and Arif Khurshed",
year = "2019",
month = "8",
day = "23",
language = "English",
type = "WorkingPaper",

}

RIS

TY - UNPB

T1 - Loan price in Mergers and Acquisitions

AU - Gao, Ning

AU - Hua, Chen

AU - Khurshed, Arif

PY - 2019/8/23

Y1 - 2019/8/23

N2 - We investigate loan price in mergers and acquisitions (M&As), using hand-matched loan infor­mation for a sample of 512 U.S. M&A transactions. We find the relative size of a deal constitutes a prominent determinant of the loan price measured by the all-in-drawn spread (AIDS). This result is robust to several specifications that address endogeneity concerns. Further analysis demonstrates higher AIDS is associated with lower post-transaction performance. We posit that deal size is a major concern for lenders because it involves greater information risk, greater busi­ness complexity, and more integration difficulties. Further, the loan price correctly factors in the risk of poor post-transaction performance. 

AB - We investigate loan price in mergers and acquisitions (M&As), using hand-matched loan infor­mation for a sample of 512 U.S. M&A transactions. We find the relative size of a deal constitutes a prominent determinant of the loan price measured by the all-in-drawn spread (AIDS). This result is robust to several specifications that address endogeneity concerns. Further analysis demonstrates higher AIDS is associated with lower post-transaction performance. We posit that deal size is a major concern for lenders because it involves greater information risk, greater busi­ness complexity, and more integration difficulties. Further, the loan price correctly factors in the risk of poor post-transaction performance. 

KW - loan price

KW - mergers and acquisitions (M&As)

KW - relative deal size

KW - post-acquisition performance

M3 - Working paper

BT - Loan price in Mergers and Acquisitions

CY - Revise & Resubmit

ER -