Information Transmission between Banks and the Market for Corporate Control

1 Pages Posted: 27 Aug 2022

See all articles by Christian Bittner

Christian Bittner

Deutsche Bundesbank; Goethe University Frankfurt

Falko Fecht

Deutsche Bundesbank; Frankfurt School of Finance & Management

Melissa Pala

DHBW Karlsruhe

Farzad Saidi

University of Bonn

Multiple version iconThere are 2 versions of this paper

Date Written: 2022

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.

Keywords: bank networks, trading, information spillovers, mergers and acquisitions, syndicated lending

JEL Classification: G11, G15, G21, G24

Suggested Citation

Bittner, Christian and Fecht, Falko and Pala, Melissa and Saidi, Farzad, Information Transmission between Banks and the Market for Corporate Control (2022). Deutsche Bundesbank Discussion Paper No. 29/2022, Available at SSRN: https://ssrn.com/abstract=4201919 or http://dx.doi.org/10.2139/ssrn.4201919

Christian Bittner (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Goethe University Frankfurt ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, Hesse 60629
Germany

Falko Fecht

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany
+4969956632312 (Phone)

HOME PAGE: http://https://www.bundesbank.de/en/falko-fecht

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Melissa Pala

DHBW Karlsruhe ( email )

Farzad Saidi

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

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