When It Pays to Pay Your Investment Banker: New Evidence on the Role of Financial Advisors in M&As
By Andrey Golubov, D. Petmezas, N. Travlos. 2012
385 citations recorded by the source corpus.
We provide new evidence on the role of financial advisors in M&As. Contrary to prior studies, top-tier advisors deliver higher bidder returns than their non-top-tier counterparts but in public acquisitions only, where the advisor reputational exposure and required skills set are relatively larger. This translates into 65.83 US$ million shareholder gain for an average bidder. The improvement comes from top-tier advisors’ ability to identify more synergistic combinations and to get a larger share of synergies to accrue to bidders. Consistent with the premium price – premium quality equilibrium, top-tier advisors charge premium fees in these transactions.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/bd4ab339afade4584c4b0429b6b1e0a445ed5f1b
How researchers see this paper
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In Accounting
- Junhong Yang
- Jie (Michael) Guo
- S. Pavićević
- Xena Welch
- Thomas Keil
- A. Guariglia
- T. Laamanen
- Z¨¦lia Serrasqueiro
In Finance
- Junhong Yang
- Jie (Michael) Guo
- A. Guariglia
- T. Laamanen
- Z¨¦lia Serrasqueiro
- Filipe Sardo
- Matthew C. Li
- Kashif Naeem
Citations in the corpus
- Institutional Cross-Ownership and Corporate Strategy: The Case of Mergers and Acquisitions (2018, neutral): “CRSP Sigma The standard deviation of the market-adjusted daily return over the (-205, -6) window (Golubov et al., 2012).”
- The Pre-Deal Phase of Mergers and Acquisitions: A Review and Research Agenda (2020, background): “While it is known that financial advisors are involved in pre-deal activities and charge significant fees for their services (e.g., Golubov et al., 2012), the research focusing on the activities through which they add value during the pre-deal process is quite limited.”
- To what extent does corporate liquidity affect M&A decisions, method of payment and performance? Evidence from China (2017, methodology): “Lastly, in line with Rosen (2006) and Golubov et al. (2012), the stock price run-up (Runup_stock) is also negatively associated with abnormal returns.”