Creditor rights and risk-taking

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.author Tawast, Ilkka
dc.date.accessioned 2012-05-10T01:30:39Z
dc.date.available 2012-05-10T01:30:39Z
dc.date.issued 2012
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/3507
dc.description.abstract CREDITOR RIGHTS AND RISK-TAKING PURPOSE OF THE STUDY In this Master’s thesis I study how creditor rights affect risk-taking of companies. Firstly, I analyze whether the level of creditor protection is associated with a higher probability of a diversifying acquisition. Secondly, I assess whether creditor protection is associated with a less risky mode of operation. Thirdly, I analyze factors, which could increase the probability of a diversifying acquisition. The main focus will be given to creditor rights’ effect on the probability to do a diversifying acquisition. Other analyses cover creditor rights’ effect on the post-merger performance of diversifying acquisitions, leverage, cash flow risk and the probability of companies operating in a low-recovery asset value industry to acquire a target from a high-recovery value industry. DATA My sample consists of 11785 completed mergers and acquisitions during a period of 1990–2010, which is gathered from SDC Platinium. The transactions are from in total of 37 countries. The financial data regarding the sample companies is retrieved from Thomson ONE banker and SDC Platinium. The creditor rights index used as the main explanatory variable is from Djankov et al (2007) and the shareholder rights index is constructed by Spamann (2010). The data of country level data is derived from various sources, mostly from the World bank databases. RESULTS I find an association between the level of creditor protection and probability to do a diversifying acquisition. Also the performance of diversifying acquisitions deteriorates in the strength of creditor rights. Additionally, I find a negative association between the level of creditor protection and leverage. I do not find strong empirical results on the potential association between creditor rights and cash flow risk and the probability of companies operating in a low-recovery asset value industry to acquire a target from a high-recovery value industry. The results are mostly in line with Acharya, Amihud and Litov (2009). KEYWORDS Investor protection, creditor rights, mergers & acquisitions, risk-taking en
dc.format.extent 77
dc.language.iso en en
dc.title Creditor rights and risk-taking en
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Economics en
dc.contributor.department Department of Finance en
dc.contributor.department Rahoituksen laitos fi
dc.subject.keyword Investor protection
dc.subject.keyword creditor rights
dc.subject.keyword mergers & acquisitions
dc.subject.keyword risk-taking
dc.identifier.urn URN:NBN:fi:aalto-201205111711
dc.type.dcmitype text en
dc.programme.major Finance en
dc.programme.major Rahoitus fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Pro gradu tutkielma fi
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon sijoittajat
dc.subject.helecon investors
dc.subject.helecon luotto
dc.subject.helecon credit
dc.subject.helecon riski
dc.subject.helecon risk
dc.subject.helecon riskienhallinta
dc.subject.helecon risk management
dc.subject.helecon yrityskaupat
dc.subject.helecon corporate acquisitions
dc.ethesisid 12785
dc.date.dateaccepted 2012-04-24
dc.location P1 I


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