The Effects of Bank Mergers on Corporate Information Disclosure

Abstract

Applying a difference-in-differences approach to explore variations in the timing of bank mergers in the U.S. over the last two decades, we document significant increase in borrowers’ disclosure when their lead banks engage in merger and acquisition activities. The effect is stronger among borrowers more reliant on services from the merging banks and when mergers cause larger changes in banks’ monitoring and financing of borrowers. These findings suggest an information spillover effect from bank mergers to the public financial markets, and have implications for how changes in U.S. banking markets affect the availability of public disclosure in the stock markets.