nach oben

Review of Quantitative Finance and Accounting

Erschienen in:

26.03.2016 | Original Research

The role of investment banks on the impact of firm performance in mergers and acquisitions: evidence from the Asia-Pacific market

verfasst von: Kai-Shi Chuang

Erschienen in: Review of Quantitative Finance and Accounting | Ausgabe 3/2017

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

This study uses a comprehensive sample of 5271 bidders during the period of 1995–2011 to examine the role of financial advisors on the outcomes of mergers and acquisitions in the Asia Pacific market. The results indicate that bidders take more time to complete deals when hiring tier-3 advisors. In addition, the empirical evidence indicates that bidders obtain higher announcement returns when hiring low reputation financial advisors. The results are robust when controlling for year effects, country effects and self-selection bias. In addition, the regression analysis also reveals that bidders obtain lower post-announcement returns when hiring tier-1 advisors in domestic deals. Thus, the empirical findings illustrate the importance of the quality of financial advisors on firm performance in mergers and acquisitions in the Asia Pacific market.

Vorheriger Artikel Do political connections affect stock price crash risk? Firm-level evidence from China

Nächster Artikel How firms manage their cash flows: an examination of diversification’s effect

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Investment banks and financial advisors are interchangeable in this study.

This study uses a 2-dig SIC code to determine whether the transactions are diversifying or focusing deals. If the target and bidder share the same 2-dig SIC code, the transactions are classified as focusing deals; diversifying deals otherwise.

To measure whether the results are sensitive due to the classification of the rank of financial advisors, this study also uses different categories to classify the quality of financial advisors. For example, the top 10 investment banks are classified as tier-1 advisors; top 11–30 investment banks as tier-2 advisors; the remaining banks as tier-3 advisors. The results are robust and consistently show that bidders advised by tier-3 advisors obtain higher announcement returns both around the announcement date and during the post-announcement period.

This study also uses La Porta et al.'s (1998) anti-director right index and Djankov et al.’s (2008) anti-self-dealing index to measure the difference of the legal requirements as a robustness check. The sign and significant level are qualitatively the same.

Acemoglu D, Johnson S (2005) Unbundling institutions. J Polit Econ 113:949–995CrossRef

Alexandrou G, Sudarsanam S (2001) Shareholder wealth effects of corporate selloffs: impact of growth opportunities economic cycle and bargaining power. Eur Financ Manage 7:237–258CrossRef

Allen L, Jagtiani J, Peristiani S, Saunders A (2004) The role of bank advisors in mergers and acquisitions. J Mon Cred Bank 36:197–224CrossRef

Bao J, Edmans A (2011) Do investment banks matter for M&A returns? Rev Financ Stud 28:2286–2315CrossRef

Bowers HM, Miller R (1990) Choice of investment banker and shareholder wealth of firms involved in acquisitions. Financ Manage 19:34–44CrossRef

Brown SJ, Warner JB (1985) Using daily stock returns: the case of event studies. J Financ Econ 14:3–31CrossRef

Chang X, Shekhar C, Tam LHK, Zhu A (2010) Prior relationship industry expertise information leakage and the choice of M&A advisor. Working paper

Chemmanur JT, Fulghieri P (1994) Investment bank reputation information production and financial intermediation. J Financ 49:57–79CrossRef

Claessens S, Fan J (2002) Corporate governance in Asia: a survey. Int Rev Financ 3:71–103CrossRef

Djankov S, La Porta R, Lopez-de-Silanes F, Shleifer A (2008) The law and economics of self-dealing. J Financ Econ 88:430–465CrossRef

Golubov A, Petmezas D, Travlos NG (2012) When it pays to pay your investment banker: new evidence on the role of financial advisor in M&As. J Financ 67:271–312CrossRef

Heckman JJ (1979) Sample selection bias as a specification error. Econometrica 47:153–161CrossRef

Hunter WC, Jagtiani J (2003) An analysis of adviser choice fees and effort in mergers and acquisitions. Rev Financ Econ 12:65–81CrossRef

Ismail A (2010) Are good financial advisors really good? The performance of investment banks in the M&A market. Rev Quant Financ Acc 35:411–429CrossRef

Kale J, Kini O, Ryan H (2003) Financial advisors and shareholder wealth gains in corporate takeovers. J Financ Quant Anal 38:475–501CrossRef

La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny R (1998) Law and finance. J Polit Econ 106:1113–1155CrossRef

Lowinski F, Schiereck D, Thomas TW (2004) The effect of cross-border acquisitions on shareholder wealth—evidence from Switzerland. Rev Quant Financ Acc 22:315–330CrossRef

Ma Y, Qu B, Zhang Y (2010) Judicial quality contract intensity and trade: firm-level evidence from developing and transition countries. J Comp Econ 38:146–159CrossRef

McLaughlin RM (1992) Investment banking contracts in tender offers: an empirical analysis. J Financ Econ 28:209–232CrossRef

Moeller SB, Schlingemann FP (2005) Global diversification and bidder gains: a comparison between cross-border and domestic acquisitions. J Bank Financ 29:533–564CrossRef

Morck R, Shleifer A, Vishny RW (1990) Do managerial objectives drive bad acquisitions? J Financ 45:31–48CrossRef

Rau PR (2000) Investment bank market share contingent fee payments and the performance of acquiring firms. J Financ Econ 56:293–324CrossRef

Rossi S, Volpin P (2004) Cross-country determinants of mergers and acquisitions. J Financ Econ 74:277–304CrossRef

Schiereck D, Sigl-Grüb C, Unverhau J (2009) Investment bank reputation and shareholder wealth effects in mergers and acquisitions. Res Int Bus Financ 23:257–273CrossRef

Servaes H (1991) Tobin’s q and gains from takeovers. J Financ 46:409–419CrossRef

Servaes H, Zenner M (1996) The role of investment banks in acquisitions. Rev Financ Stud 9:787–815CrossRef

Shams SMM, Gunasekarage A, Colombage SRN (2013) Does the organizational form of the target influence market reaction to acquisition announcements? Australian evidence. Pac Basin Financ J 24:89–108CrossRef

Shu PG, Yeh YH, Chiu SB, Wang LH (2013) The impact of market-nurtured optimism on mergers: empirical evidence by the Taiwan’s equity market. Rev Pac Basin Financ Mark Polic 12:545–566

Skouratova E, Wald JK (2013) How crosslisting affects merger acquisition activity. Rev Quant Financ Acc 40:319–339CrossRef

Song W, Wei J, Zhou L (2013) The value of boutique financial advisors in mergers and acquisitions. J Corp Financ 20:94–114CrossRef

Walter TS, Yawaon A, Yeung C (2008) The role of investment banks in M&A transactions: fees and services. Pac Basin Financ J 16:341–369CrossRef

Wang W, Whyte AM (2010) Managerial rights use of investment banks and the wealth effects for acquiring firms’ shareholders. J Bank Financ 34:44–54CrossRef

White H (1980) A heteroskedasticity-consistent matrix and direct test for heteroskedasticity. Econometrica 48:817–838CrossRef

Titel: The role of investment banks on the impact of firm performance in mergers and acquisitions: evidence from the Asia-Pacific market
verfasst von: Kai-Shi Chuang
Publikationsdatum: 26.03.2016
Verlag: Springer US
Erschienen in: Review of Quantitative Finance and Accounting / Ausgabe 3/2017
Print ISSN: 0924-865X
Elektronische ISSN: 1573-7179
DOI: https://doi.org/10.1007/s11156-016-0564-2

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 3/2017

The executive compensation implications of the tax component of earnings

Corporate governance, ownership structure and managing earnings to meet critical thresholds among Chinese listed firms

Do political connections affect stock price crash risk? Firm-level evidence from China

Recap of the 27th annual financial economics and accounting conference, September 30–October 1, 2016

The bond event study methodology since 1974

How firms manage their cash flows: an examination of diversification’s effect