Dual Ownership, Returns, and Voting in Mergers

42 Pages Posted: 12 Feb 2014 Last revised: 13 Feb 2014

See all articles by Andriy Bodnaruk

Andriy Bodnaruk

University of Illinois at Chicago

Marco Rossi

Texas A&M

Date Written: January 24, 2014


We document that in M&As a significant proportion of targets’ equity is owned by financial institutions that simultaneously own targets’ bonds (“dual holders”). Targets with larger equity ownership by dual holders have lower M&A equity premia and larger abnormal bond returns, particularly when dual holders stand to benefit more from appreciation of their bond stakes, e.g., when their bond ownership in the target is large and the target credit rating is non-investment grade. Dual holders are more likely to vote in favor of the merger proposal. Our results suggest the presence of coordination of decisions within dual holding financial conglomerates in M&A targets.

Keywords: dual holders, shareholders, bondholders, M&As, abnormal return, financial conglomerates

JEL Classification: G23, G32, G34

Suggested Citation

Bodnaruk, Andriy and Rossi, Marco, Dual Ownership, Returns, and Voting in Mergers (January 24, 2014). Finance Down Under 2014 Building on the Best from the Cellars of Finance, Available at SSRN: https://ssrn.com/abstract=2348094 or http://dx.doi.org/10.2139/ssrn.2348094

Andriy Bodnaruk (Contact Author)

University of Illinois at Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

Marco Rossi

Texas A&M ( email )

360S Wehner
College Station, TX 77843-4218
United States

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