The Burden of National Debt: Evidence from Mergers and Acquisitions
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Description
Increases in government debt are associated with a reduction in the yield spread between high-grade corporate bonds and long-term Treasuries and an increase in fiscal uncertainty. Consequently, increases in government debt significantly reduce the firm’s likelihood of acquisition. The effect is stronger among firms whose debt is a closer substitute for Treasuries and firms with greater exposure to fiscal uncertainty. A positive change in government debt motivates acquirers to avoid cash financing or more irreversible deals. The average deal quality is lower during periods of rising public debt, consistent with heightened fiscal uncertainty impeding monitoring and fostering “bad” deals.
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| ID Code: | 231508 | ||||||
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| Item Type: | Contribution to Journal (Journal Article) | ||||||
| Refereed: | Yes | ||||||
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| Measurements or Duration: | 42 pages | ||||||
| DOI: | 10.1093/rcfs/cfac018 | ||||||
| ISSN: | 2046-9136 | ||||||
| Pure ID: | 110419872 | ||||||
| Divisions: | Current > QUT Faculties and Divisions > Faculty of Business & Law Current > Schools > School of Economics & Finance |
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| Copyright Owner: | The Author(s) 2022 | ||||||
| Copyright Statement: | This work is covered by copyright. Unless the document is being made available under a Creative Commons Licence, you must assume that re-use is limited to personal use and that permission from the copyright owner must be obtained for all other uses. If the document is available under a Creative Commons License (or other specified license) then refer to the Licence for details of permitted re-use. It is a condition of access that users recognise and abide by the legal requirements associated with these rights. If you believe that this work infringes copyright please provide details by email to qut.copyright@qut.edu.au | ||||||
| Deposited On: | 25 May 2022 04:49 | ||||||
| Last Modified: | 01 May 2024 22:41 |
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