Corporate Acquisitions and Bank Relationships

69 Pages Posted: 14 Nov 2021

See all articles by Steven Poelhekke

Steven Poelhekke

University of Auckland

Razvan Vlahu

De Nederlandsche Bank

Vadym Volosovych

Erasmus University Rotterdam (EUR)

Date Written: September 24, 2021

Abstract

Using a large dataset of firm-bank and ownership information for 23 European countries over 2008-2015, we study the dynamics of bank relationships after corporate acquisitions and the effects of changing banks on firm performance. Foreign acquirers do not rely on internal capital markets but keep targets’ domestic banks. With more domestic banks, firms increase fixed capital and trade credit. In contrast, domestic acquirers remove domestic but add foreign banks. The latter mainly help reduce the cost of financing. We further explore firm and bank heterogeneity and confirm cost of financing and information asymmetry as plausible reasons to change banks.

Keywords: Acquisitions, Firm-bank relationships, Firm financing, Operating performance

JEL Classification: D82, E51, F36, G21, G34

Suggested Citation

Poelhekke, Steven and Vlahu, Razvan and Volosovych, Vadym, Corporate Acquisitions and Bank Relationships (September 24, 2021). De Nederlandsche Bank Working Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3959107 or http://dx.doi.org/10.2139/ssrn.3959107

Steven Poelhekke (Contact Author)

University of Auckland

Razvan Vlahu

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands
+31205242483 (Phone)
+31205242506 (Fax)

Vadym Volosovych

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
Room E2-31
3000 DR Rotterdam, 3062PA
Netherlands
+31 10 408 1286 (Phone)
+31 10 408 9165 (Fax)

HOME PAGE: http://https://www.eur.nl/people/vadym-volosovych/

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