Stefano Rossi wins FMARC 2024 Best Finance Paper Award

Stefano Rossi
Credit Market Driven Acquisitions

Stefano Rossi wins FMARC 2024 Best Finance Paper Award for his paper “Credit Market Driven Acquisitions”. The award was presented at the Financial Management and Accounting Research 2024, in Ayia Napa.


Using a comprehensive sample of takeovers over 1983-2016, we show that credit market conditions drive takeover activity. When credit spreads are low in quarter t, junk bonds are disproportionately issued and aggregate credit quality deteriorates; debt-financed, all-cash takeovers increase from quarter t+2, peak at quarter t+5, and subside as credit spreads widen. At the firm level, buoyant credit market conditions correlate with more debt-financed takeovers, particularly for overconfident CEOs, and also with higher announcement-day returns and operating performance, except for overconfident CEOs. Our results are consistent with buoyant credit market conditions ameliorating under-investment, but only for acquirers with non-overconfident CEOs.