Abstract

This thesis consists of three essays. The first essay (thesis chapter two) examines the relation between the terms of loans and the borrower's cross-listed situation for samples (un)differentiated by the state of economic development of the home country of the non-U.S. borrower and the distribution method. An important contribution is made to the cross-listing and capital structure literatures by providing evidence that the net benefit from being cross-listed for one debt component of the cost of capital (i.e., private corporate loans) depends upon whether or not the loan is syndicated. All else held equal, foreign borrowers that are cross-listed directly in the U.S. [U.K.] obtain loans with lower spreads [higher amounts] only for non-syndicated loans. Compared to their developed country counterparts, borrowers from emerging economies pay lower spreads and receive higher amounts and longer maturities on non-syndicated loans if cross-listed via Depositary Receipts (American or Global). These favorable effects for cross-listed borrowers are negated or become unfavorable if the loans are syndicated. The second essay (thesis chapter three) studies alliances between financial institutions in the syndicated loan market and finds that the odds of a current syndicate relationship between two lenders depend upon their previous alliances. For example, the odds are significantly higher [lower] and strongest for a current lead-participant relationship with a continuation [reversal] of their previous roles. Specifically, the odds are nearly four times higher when the two lenders have been allied in the previous five years and more than twice higher for every standard deviation increase in the relative number of past alliances. The strength of lead-participant syndicate relationships between two lenders with same-ordered roles is most sensitive to the lead bank's reputation and informationally opaque lenders tend to have stronger relationships with lead banks. Lenders appear to exhibit home bias in their syndicate alliances since ongoing relationships are stronger with domestic counterparts. The third essay (thesis chapter four) examines the impact of past syndicate alliances on the consolidation of financial institutions. The odds of a M&A between two lenders increases when both parties co-participated in previous syndicated loans and with the intensity of such participations during the five-year period prior to the M&A. The impact is higher for international M&As, for cross-industry alliances, and when the acquirer and target are participant and lead, respectively, in the common syndicate relationships. The odds of a particular lender being a target also decreases with increases in the target's leverage and ROE, and increases with increases in the target's size and growth opportunities. The significantly lower short- and long-term performances for both acquirers and targets previously co-involved in past syndicated loans disappear in the presence of various control variables. These control variables account for the less frequent use of cash payment, the greater incidence of divestitures and the higher percentage of shares acquired when the merging parties were co-involved in past loan syndications