Cross-Company Effects of Common Ownership: Dealings between Borrowers and Lenders with a Common Blockholder

38 Pages Posted: 22 Dec 2015

See all articles by Gjergji Cici

Gjergji Cici

University of Kansas - School of Business

Scott Gibson

College of William and Mary - Mason School of Business

Claire M. Rosenfeld

College of William and Mary - Finance

Date Written: December 19, 2015

Abstract

We study the effects of common ownership on syndicated loan market interactions. We find that borrowers and lenders that are commonly held by an institutional blockholder tended to do more business together going forward than those that are not commonly held. We hypothesize that the increased likelihood of striking a deal derives from conversations between borrowers and blockholders about financing plans, which, in turn, increases borrowers’ familiarity and perhaps opinion of commonly owned lenders. Consistent with this view, we find that the increase in dealings occurred only when the blockholder followed an active rather than a passive investment strategy.

Keywords: cross-ownership, institutional ownership, active investment, credit market interactions, syndicated lending

JEL Classification: D22, G21, G23, G30

Suggested Citation

Cici, Gjergji and Gibson, George Scott and Rosenfeld, Claire M., Cross-Company Effects of Common Ownership: Dealings between Borrowers and Lenders with a Common Blockholder (December 19, 2015). Available at SSRN: https://ssrn.com/abstract=2705856 or http://dx.doi.org/10.2139/ssrn.2705856

Gjergji Cici (Contact Author)

University of Kansas - School of Business ( email )

Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States
785-864-3873 (Phone)

HOME PAGE: http://business.ku.edu/gjergji-cici

George Scott Gibson

College of William and Mary - Mason School of Business ( email )

P.O. Box 8795
Williamsburg, VA 23187-8795
United States
757/221-1673 (Phone)

Claire M. Rosenfeld

College of William and Mary - Finance ( email )

VA
United States

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