Top-tier financial advisors, expropriation and Chinese mergers & acquisitions
XiaoGang Bi and
Danni Wang
International Review of Financial Analysis, 2018, vol. 57, issue C, 157-166
Abstract:
The empirical literature contains mixed evidence regarding the relationship between advisor reputation and returns in mergers and acquisitions (M&As). However, very few studies consider the detrimental effect of expropriation by controlling shareholders and value creation role of top-tier financial advisors. We revisit the role of financial advisors in M&As by examining whether and why top-tier advisors affect acquisition quality in the Chinese market, finding that they generate substantial value for acquiring shareholders, though value creation is lower for high expropriation-possibility acquirers. We also show that top-tier financial advisors help improve operating performance and reduce bid premiums. The results contribute to the takeover literature by shedding new light on the role of financial advisor in acquisitions.
Keywords: Investment banking; Financial advisors; Mergers & acquisitions; Expropriation; Value creation (search for similar items in EconPapers)
JEL-codes: G24 G34 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:57:y:2018:i:c:p:157-166
DOI: 10.1016/j.irfa.2018.03.002
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