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Bond market access and acquisitions: empirical evidence from the European market

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  • Magnus Blomkvist
  • Teemu Friman
  • Timo Korkeamäki

Abstract

We investigate whether access to bond markets affects acquisition activity of the European firms between 1999 and 2014. Our study provides insight into the effect that the growing European bond market has on corporate investment activity. We find that access to the bond markets, measured by the existence of a credit rating, has a significant effect on the tendency of firms to make acquisitions. The effect is strongest in Continental Europe and during times of high acquisition activity. We further find that consistent with prior U.S. evidence, bond market access has an inverse effect on abnormal returns generated by the acquisitions. That finding suggests that firms with superior access to financing pursue targets of lesser quality.

Suggested Citation

  • Magnus Blomkvist & Teemu Friman & Timo Korkeamäki, 2018. "Bond market access and acquisitions: empirical evidence from the European market," The European Journal of Finance, Taylor & Francis Journals, vol. 24(6), pages 478-498, April.
    • Handle: RePEc:taf:eurjfi:v:24:y:2018:i:6:p:478-498
    DOI: 10.1080/1351847X.2017.1323771
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    Cited by:

    1. Blomkvist, Magnus & Felixson, Karl & Liljeblom, Eva & Vyas, Hitesh & Basnet, Anup, 2024. "The acquisition motive of newly credit rated firms," Journal of Banking & Finance, Elsevier, vol. 164(C).
    2. Magnus Blomkvist & Johannes Kortekangas & Hitesh Vyas, 2021. "Credit rating levels and acquisitions: the European evidence," Economics Bulletin, AccessEcon, vol. 41(2), pages 222-233.
    3. Magnus Blomkvist & Johannes Kortekangas & Hitesh Vyas, 2021. "Credit Rating Levels and Acquisitions: The European Evidence," Post-Print hal-03196701, HAL.

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