Journal of International Business Studies

, Volume 48, Issue 2, pp 174–194 | Cite as

Creditor rights, claims enforcement, and bond performance in mergers and acquisitions

  • Luc Renneboog
  • Peter G. Szilagyi
  • Cara Vansteenkiste
Article

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.

Keywords

bondholder value cross-border mergers and acquisitions (M&As) creditor rights legal enforcement event study Eurobonds 

Résumé

Cet article montre que les différences dans la protection des créanciers au niveau des pays influencent les performances des obligations concernant les annonces de fusions-acquisitions (FA) internationales. Utilisant des euro-obligations et un échantillon global de 1 100 FA transfrontalières, nous constatons que les porteurs d’obligations d’entreprises qui enchérissent répondent plus positivement aux transactions qui exposent leur entreprise à une juridiction offrant des droits plus forts aux créanciers et une gestion plus efficace des revendications par le biais de tribunaux. Les retombées d’une protection positive des créanciers sont renforcées par la coopération juridictionnelle désormais mondiale concernant l’insolvabilité des multinationales et la capacité des créanciers à avoir recours à l’arbitrage d’insolvabilité. Les retombées que nous observons sont plus fortes pour les entreprises à risque d’actifs plus élevé, à maturité d’obligations plus longue et à détresse financière plus probable.

Resumen

Este artículo muestra que las diferencias a nivel nacional en la protección de los acreedores afectan el rendimiento en torno a los anuncios de fusiones y adquisiciones transfronterizas. Usando Eurobonos y una muestra global de 1.100 fusiones y adquisiciones transfronterizas, encontramos que los titulares de bonos de firmas oferentes responden más positivamente a ofertas que exponen sus empresas a una jurisdicción con unos derechos más fuertes para los acreedores y reclamaciones más eficientes mediante tribunales. Los efectos indirectos de protección positiva de los acreedores son reforzados mediante cooperación jurisdiccional ahora mundial de las insolvencias multinacionales y la habilidad del acreedor a hacer arbitraje de insolvencia. Los efectos secundarios que observamos son más fuertes para empresas con riesgo más alto de sus activos, bonos de vencimiento a plazos más largos, y mayor posibilidad de problemas financieros.

Resumo

Este artigo mostra que as diferenças a nível nacional na proteção de credores afetam o desempenho de títulos no entorno de anúncios sobre M & A transfronteiriças. Usando Eurobonds e uma amostra mundial de 1.100 M & A transfronteiriças, descobrimos que os detentores de títulos de empresas a serem adquiridas respondem mais positivamente a ofertas que expõem a empresa a uma jurisdição com direitos de credores mais fortes e mais eficiente aplicação de demandas através de tribunais. Os efeitos suplementares positivos da proteção a credores são reforçados pela cooperação jurisdicional agora global em insolvências multinacionais e pela capacidade dos credores para fazer arbitragem na insolvência. Os efeitos suplementares que observamos são mais fortes para as empresas com maior risco de ativos, títulos com prazos mais longos, e uma maior probabilidade de dificuldades financeiras.

概要

这篇文章显示, 在债权人保护方面国家层面的差异影响跨国并购公告时的债劵业绩。使用欧洲债券和全球1,100个跨国并购的样本, 我们发现, 投标公司债券持有者们对那些使他们的公司处在具有更强的债权人权利和更有效的法院执法索赔的司法管辖区的交易的反应更为积极。积极的债权人保护溢出效应通过跨国破产的当下全球管辖区的合作及债权人破产套利的能力而增强。我们观察到的溢出效应对具有较高资产风险, 较长期限债券, 以及财务困境可能性较大的公司更强。

JEL Classification

G34 G32 G12 G14 

Supplementary material

41267_2016_31_MOESM1_ESM.docx (29 kb)
Supplementary material 1 (DOCX 19 kb)

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Copyright information

© Academy of International Business 2016

Authors and Affiliations

  • Luc Renneboog
    • 1
  • Peter G. Szilagyi
    • 2
    • 3
  • Cara Vansteenkiste
    • 1
  1. 1.Tilburg UniversityTilburgNetherlands
  2. 2.Central European UniversityBudapestHungary
  3. 3.Judge Business SchoolUniversity of CambridgeCambridgeUK

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