The role of equity underwriting relationships in mergers and acquisitions

Hsuan-Chi Chen, Keng-Yu Ho, Pei-Shih Weng and Chia-Wei Yeh

Pacific-Basin Finance Journal, 2020, vol. 64, issue C

Abstract: We examine the role of equity underwriting relationships in subsequent mergers and acquisitions (M&As). Firms, either the bidders or targets, tend to choose their M&A advisors with prior equity underwriting relationships. Consistent with the cost-saving hypothesis, retaining their prior underwriters as future advisors is related to cost reduction in the M&A advisory. Firms also experience shorter deal duration if they hire relationship advisors. This study contributes to the further understanding of how firms derive value from investment bank relationships.

Keywords: Underwriting; Financial advisor; Merger and acquisition (search for similar items in EconPapers)
JEL-codes: G00 G20 G30 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:64:y:2020:i:c:s0927538x20306739

DOI: 10.1016/j.pacfin.2020.101461

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