贷款人审查下的企业并购

Federal Reserve Board, Washington, D.C.ISSN 1936-2854 (Print)ISSN 2767-3898 (Online) Corporate Mergers and Acquisitions Under Lender Scrutiny Buhui QIu, Teng Wang 2024-025 Please cite this paper as:QIu, Buhui, and Teng Wang (2024).“Corporate Mergers and Acquisitions Under LenderScrutiny,” Finance and Economics Discussion Series 2024-025. Washington: Board of Gov-ernors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2024.025. NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminarymaterials circulated to stimulate discussion and critical comment.The analysis and conclusions set forthare those of the authors and do not indicate concurrence by other members of the research staff or theBoard of Governors. References in publications to the Finance and Economics Discussion Series (other thanacknowledgement) should be cleared with the author(s) to protect the tentative character of these papers. Corporate Mergers and Acquisitions Under Lender Scrutiny* BuhuiQiu†University of SydneyTengWang‡§Federal Reserve Board January 2024 Abstract This paper examines corporate mergers and acquisitions (M&A) outcomes underlender scrutiny. Using the unique shocks of U.S. supervisory stress testing, we findthat firms under increased lender scrutiny after their relationship banks fail stresstests engage infewerbuthigher-qualityM&A deals. Evidence from comprehensivesupervisory data reveals improved credit quality for newly originated M&A-relatedloans under enhanced lender scrutiny. This improvement is further evident in positivestock return reactions to M&A deals financed by loans subject to enhanced lenderscrutiny. As companies engage in fewer but higher-quality deals, they also experiencehigher returns on assets. Our findings highlight the importance of lender scrutiny incorporate M&A activities.. JEL Classification: G21; G34.Keywords: Mergers and Acquisitions; Lender Scrutiny; Stress Tests. "The Federal Reserve is strongly committed to stress testing as a cornerstone of our banksupervisory and financial stability missions. Stress testing is perhaps the most successfulsupervisory innovation of the post-crisis era." —Jerome H Powell 1Introduction Despite trillions of dollars spent on corporate mergers and acquisitions (M&A) eachyear, the evidence in the literature clearly indicates that these transactions do not alwaysbenefit acquiring firms’ shareholders. The literature suggests that executives often engagein agency-motivated acquisitions to benefit themselves (e.g., Grinstein and Hribar 2004;Harford and Li 2007; Ishii and Xuan 2014) at the expense of shareholders. M&A caneven lead to significant shareholder wealth destruction (e.g., Moeller et al. 2004; Moelleret al. 2005). Banks, a major source of funding for corporate M&A activity,1are known fortheir special ability in scrutinizing loan applications and investment projects of higherquality (e.g., Stiglitz and Weiss 1981; Bester 1985; Diamond 1991; Boyd and Prescott 1986;Marquez 2002). Can enhanced lender scrutiny affect corporate M&A activity and theshareholder value of acquiring firms? This paper examines corporate M&A outcomesunder enhanced lender scrutiny following the unique shocks of bank stress test failures. Testing the direct effects of lender scrutiny on corporate M&A activities presentsseveral identification challenges. One issue is that the strength of lender scrutiny cannotbe directly observed or measured. Additionally, even if it could be observed, the level ofscrutiny would likely be correlated with various characteristics of corporate borrowers,making it difficult to establish causality.In this study, we consider banks failing theFederal Reserve’s forward-looking stress tests as significant events that directly increasethe loan scrutinizing incentives of the failed banks. Our findings indicate a significant effect of enhanced lender scrutiny from stress test failed banks on corporate borrowers’M&A activities. Indeed, recent studies suggest that capital regulations can increase banks’ monitoringincentives and thus the efficiency of banks’ activities (e.g. Begenau 2020). Federal Reserve’sSupervisory Stress Tests, as the cornerstone in the U.S. post-Global Financial Crisis capitalregulatory framework, are ideal for tackling the aforementioned identification challengesfor the following reasons.First, banks take failing stress tests seriously.Supervisorystress tests are installed to assess whether banks have enough capital to survive adverseeconomic shocks. Failing the stress test causes severe reputational damage and leads toimmediate constraints on a bank’s capital distribution plan, including the prohibition ofdividend distribution and net share repurchase.2The significance of these events is wellstated by Michael Corbat, former CEO of Citigroup, who viewed passing the followingyear’s stress test as Mission No. 1. After Citigroup failed the stress test in 2014, Mr. Corbatemphasized that “If we