This paper suggests a motive for bank mergers that goes beyond alleged and typically unverifiable scale economies: preemtive resolution of banks ́financial distress. Such "distress mergers" can be a significant motivation for mergers because they can foster reorganizations, realize...

This paper provides new insights into the nature of relationship lending by analyzing the role of collateral and itsreal effects with respect to workout activities. We use a unique data set based on credit files of five leading Germanbanks, thus relying on real information used in the process of...

Traditional tests of the CAPM following the Fama / MacBeth (1973) procedure are tests of thejoint hypotheses that there is a relationship between beta and realized return and that the marketrisk premium is positive. The conditional test procedure developed by Pettengill / Sundaram/ Mathur (1995)...

This study examines empirically whether corporate ratings by the credit ratingagency Standard & Poor’s reflect fundamental and publicly observable shocks tothe credit quality of companies. This serves to assess the degree of informationsensitivity of external ratings, and the timeliness of...

We address the question whether the impact of default risk on equity returns dependson the financial system firms operate in. We compare results from asset pricing testsfor the German and the U.S. stock markets, where Germany is the prime-example fora bank-based financial system. We find that a...

Even 50 years after Modigliani/Miller’s irrelevance theorem, the basic question of how firmschoose their capital structure remains unclear. This survey paper aims at summarizing anddiscussing corresponding recent developments in empirical capital structure research, which,in our view, are...

We use panel data from nine countries over the period 1996 to 2003 to test how revenue diversi-fication in conjunction with increasing bank size affects bank value. Using a comprehensive framework for bank performance measurement, we find no evidence for a conglomerate dis-count, unlike studies...