The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors
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 cor...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2016
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/82299 http://hdl.handle.net/10220/41180 |
| _version_ | 1811676271498756096 |
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| author | Chang, Xin Shekhar, Chander Tam, Lewis H.K. Yao, Jiaquan |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Chang, Xin Shekhar, Chander Tam, Lewis H.K. Yao, Jiaquan |
| author_sort | Chang, Xin |
| collection | NTU |
| description | 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. |
| first_indexed | 2024-10-01T02:18:49Z |
| format | Journal Article |
| id | ntu-10356/82299 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T02:18:49Z |
| publishDate | 2016 |
| record_format | dspace |
| spelling | ntu-10356/822992023-05-19T06:44:42Z The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors Chang, Xin Shekhar, Chander Tam, Lewis H.K. Yao, Jiaquan Nanyang Business School Mergers and acquisitions Investment banking 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. Accepted version 2016-08-26T06:37:49Z 2019-12-06T14:52:48Z 2016-08-26T06:37:49Z 2019-12-06T14:52:48Z 2016 Journal Article Chang, X., Shekhar, C., Tam, L. H. K., & Yao, J. (2016). The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors. Journal of Banking & Finance, 70, 247-264. 0378-4266 https://hdl.handle.net/10356/82299 http://hdl.handle.net/10220/41180 10.1016/j.jbankfin.2016.05.006 en Journal of Banking & Finance © 2016 Elsevier. This is the author created version of a work that has been peer reviewed and accepted for publication by Journal of Banking & Finance, Elsevier. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: http://dx.doi.org/10.1016/j.jbankfin.2016.05.006. 54 p. application/pdf |
| spellingShingle | Mergers and acquisitions Investment banking Chang, Xin Shekhar, Chander Tam, Lewis H.K. Yao, Jiaquan The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors |
| title | The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors |
| title_full | The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors |
| title_fullStr | The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors |
| title_full_unstemmed | The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors |
| title_short | The information role of advisors in mergers and acquisitions: Evidence from acquirers hiring targets’ ex-advisors |
| title_sort | information role of advisors in mergers and acquisitions evidence from acquirers hiring targets ex advisors |
| topic | Mergers and acquisitions Investment banking |
| url | https://hdl.handle.net/10356/82299 http://hdl.handle.net/10220/41180 |
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