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Information transmission between banks and the market for corporate control

Author

Listed:
  • Bittner, Christian
  • Fecht, Falko
  • Pala, Melissa
  • Saidi, Farzad

Abstract

This paper provides evidence of deliberate private-information disclosure within banks' international business networks. Using supervisory trade-level data, we show that banks with closer ties to a target advisor in a takeover buy more stocks of the target firm prior to the deal announcement, enabling them to benefit from the positive announcement return. We do not find such effects for bank connections to acquirer advisors or for trades in acquirer stocks. Target advisors benefit from leaking information about takeover bids to connected banks, as it drives up the final offer price without compromising the probability of bid success.

Suggested Citation

  • Bittner, Christian & Fecht, Falko & Pala, Melissa & Saidi, Farzad, 2022. "Information transmission between banks and the market for corporate control," Discussion Papers 29/2022, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:292022
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    References listed on IDEAS

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    More about this item

    Keywords

    bank networks; trading; information spillovers; mergers and acquisitions; syndicated lending;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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