Top-tier advisors and the market feedback dynamics in cross-border M&As

Samer Adra, Malika Hamadi and Jiayi Yuan

International Review of Financial Analysis, 2023, vol. 86, issue C

Abstract: We provide evidence that the presence of top-tier advisors increases managers' propensity to withdraw from cross-border mergers and acquisitions (CBAs) with poor market returns around the announcement. This effect is stronger for private target acquisitions, in which information asymmetry is expected to be more pronounced, and smaller bidders, who are likely to lack the expertise required to process information themselves. This suggests that managers assisted by reputable investment banks consider negative market feedback in informationally challenging deals. Our results are robust to several endogeneity tests. We provide novel inferences about the informative role of stock markets in shaping advisory roles in respect of M&As.

Keywords: Top-tier advisors; Market feedback; Cross-border mergers and acquisitions; Deal cancellation (search for similar items in EconPapers)
JEL-codes: G14 G24 G34 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:86:y:2023:i:c:s105752192300011x

DOI: 10.1016/j.irfa.2023.102495

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