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Information Intermediaries: How Commercial Bankers Facilitate Strategic Alliances

Published online by Cambridge University Press:  04 May 2022

Marc Frattaroli  and
Christoph Herpfer Open the ORCID record for Christoph Herpfer [Opens in a new window]
Marc Frattaroli
Affiliation:
Finreon AG marc.frattaroli@finreon.ch
Christoph Herpfer*
Affiliation:
Emory University Goizueta Business School
*
christoph.herpfer@emory.edu (corresponding author)
Rights & Permissions [Opens in a new window]

Abstract

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We investigate how bankers use information from lending relationships to help borrowers find partners for strategic alliances. Firms that have borrowed from the same banker or share an indirect connection through a network of bankers are significantly more likely to enter an alliance. Consistent with bankers overcoming informational frictions, their ability to facilitate alliances decreases with banker-network distance, and is stronger for opaque borrowers. Firms connected to more potential partners via banker networks enter more alliances. These alliances are associated with positive announcement returns, and brokering banks are more likely to receive future underwriting mandates.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 58 , Issue 2 , March 2023 , pp. 543 - 573
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© THE AUTHOR(S), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank Tetyana Balyuk, Ina Bialova, Gabriela Coiculescu, Stefano Colonnello, Sandeep Dahiya, Rüdiger Fahlenbrach, Jarrad Harford (the editor), Stephen Karolyi, Kristoph Kleiner, Elena Loutskina, Amiyatosh Purnanandam, Oliver Randall, Farzad Saidi, Michael Schwert, Merih Sevilir, Andrei Simonov (the referee), and René Stulz for helpful discussions, and seminar and conference participants at Emory University, NYU, the University of St. Gallen, the University of Zurich, the Norwegian School of Economics, the Irish Academy of Finance Conference, the Mid-Atlantic Research Conference in Finance, the SGF conference, the SFI Research Days, and the 8th MoFiR Workshop for helpful comments and suggestions. This article was part of Frattaroli’s dissertation at EPFL. He gratefully acknowledges financial support from the Swiss Finance Institute.

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