The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors
Chang,Xin1,5; Shekhar,Chander2; Tam,Lewis H.K.3; Yao,Jiaquan4
2016-09-01
Source PublicationJournal of Banking and Finance
ABS Journal Level3
ISSN03784266
Volume70Pages:247-264
Abstract

We examine the information role of financial advisors by focusing on mergers and acquisitions in which acquiring firms hire target firms’ ex-advisors. We document that by employing targets’ ex-advisors, acquirers pay lower takeover premiums and secure a larger proportion of merger synergies. The corresponding targets exhibit lower announcement returns and are less likely to be propositioned by competing bidders. These results indicate that acquirers take advantage of value-relevant information about targets through targets’ ex-advisors, and achieve bargaining advantages in deal negotiations. In contrast, we document no discernible value effects when targets hire acquirers’ ex-advisors, suggesting that the information role of acquirers’ ex-advisors hired by targets is weaker than that of targets’ ex-advisors hired by acquirers.

KeywordAdvisory Services Bargaining Competition Investment Banking Mergers And Acquisitions
DOI10.1016/j.jbankfin.2016.05.006
URLView the original
Indexed BySSCI ; SSCI
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectBusiness, Finance ; Economics
WOS IDWOS:000386407900015
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Citation statistics
Cited Times [WOS]:8   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionDEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
Corresponding AuthorYao,Jiaquan
Affiliation1.Cambridge Judge Business School,University of Cambridge,,CB2 1AG,United Kingdom
2.Department of Finance,Faculty of Economics and Commerce,University of Melbourne,,3010,Australia
3.Department of Finance and Business Economics,Faculty of Business Administration,University of Macau,,Macau,Macao
4.Wang Yanan Institute for Studies in Economics and School of Economics,Xiamen University,,361005,China
5.Nanyang Business School,Nanyang Technological University,,639798,Singapore
Recommended Citation
GB/T 7714
Chang,Xin,Shekhar,Chander,Tam,Lewis H.K.,et al. The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors[J]. Journal of Banking and Finance,2016,70:247-264.
APA Chang,Xin,Shekhar,Chander,Tam,Lewis H.K.,&Yao,Jiaquan.(2016).The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors.Journal of Banking and Finance,70,247-264.
MLA Chang,Xin,et al."The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors".Journal of Banking and Finance 70(2016):247-264.
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