Debt-Fueled Acquisitions by Non-Financial Firms Employing Bank-Associated Officers in Poland

Abstract

ABSTRACT Firms employing former or incumbent members of management and supervisory boards of commercial banks exhibit higher acquisitiveness. The presence of bank-associated officers increases firms’ proclivity to engage in serial, cross-industry, and cross-border acquisitions. Firms employing bank-associated officers buy targets with lower complementarity. They are also significantly more likely to settle transactions in cash, especially their first acquisition. While all firms experience acquisition-related increases in leverage, the latter is higher in firms employing bank-associated officers, particularly those associated with state-owned banks. Acquisitions completed by banker-employing firms record lower short-term shareholder returns than the remainder of the research sample.