Do low search costs facilitate like-buys-like mergers? Evidence from common bank networks

• 成果类型: Article
• 署名作者: Chen, Jiakai; Kim, Joon Ho; Rhee, S. Ghon
• 署名单位: University of Hawaii System; University of Hawaii Manoa
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.12.002
• 发表日期: 2021
• 关键词: search costs; Common bank network; Asset complementarity; Like-buys-like mergers; synergy

摘要

We examine how search frictions affect merger outcomes. Exploiting firm connections in common bank networks (CBNs) as a channel for reducing search costs, we show that like-buys-like mergers are more probable between firms connected through a CBN. This effect is amplified if the connection has been recently formed or the network contains many plausible choices for merger partners. CBN-facilitated mergers exhibit higher synergy and lower post-merger cost of debt. We confirm that CBNs reduce search costs even after alternative explanations are considered. These findings highlight the importance of search in the process of redrawing firm boundaries. Published by Elsevier B.V.