Financial advisors, financial crisis, and shareholder wealth in bank mergers

Kai-Shi Chuang

Global Finance Journal, 2014, vol. 25, issue 3, 229-245

Abstract: This study investigates the relationship between the quality of investment banks and shareholder wealth in bank mergers. Focusing on a US sample of 415 targets and 1066 bidders from 1995 to 2010, I find that the quality of financial advisors appears to have a significant impact on shareholder wealth for bidding firms, but not for target firms. The results suggest that bidders experience higher losses when hiring tier-1 advisors. Further analysis shows that this finding holds during ‘normal’ periods, but not during crisis periods, where I find a significant positive relationship between tier-1 advisors and bidder announcement returns, suggesting that more prestigious financial advisors can offer superior advising services.

Keywords: Investment banks; Bank mergers; Shareholder wealth; Financial crisis (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:25:y:2014:i:3:p:229-245

DOI: 10.1016/j.gfj.2014.10.004

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