We study whether borrowing firms consider the informational needs of various market participants and strategically adjust their financial reporting behavior. Using a large sample of borrowing firms from 1990 to 2018, we find that borrowing firms sharing the same bank as their lender have higher financial statement comparability. Second, we demonstrate that the comparability between borrowers of target and acquirer banks increases in the post bank merger period. Furthermore, we find a decrease in the comparability between borrowers of a target bank and their industry peers, which are not affected by bank mergers. Our results hold even after we consider borrowers’ voluntary disclosure behavior, borrowers switching their lenders in the post bank merger periods, and borrowers’ covenant violations. Our findings suggest that in response to bank mergers, borrowing firms prioritize the demand from their new creditors over the demand from other market participants and make strategic reporting decisions.
