Investment bank reputation and shareholder wealth effects in mergers and acquisitions

Dirk Schiereck, Christof Sigl-Grüb and Jan Unverhau

Research in International Business and Finance, 2009, vol. 23, issue 3, 257-273

Abstract: This paper investigates the relationship between the reputation of investment banks employed in mergers and acquisitions transactions and the resulting wealth effects. Two hypotheses are tested: the superior deal hypothesis, stating that high reputation advisors suggest deals with higher overall transaction gains; and the bargaining advantage hypothesis, stating that the larger share of transaction benefits is attributed to the party employing a highly reputed advisor. Evidence from 285 European M&A-transactions announced between 1997 and 2002 does not support any of these hypotheses. On average, wealth effects are not significantly different for transactions advised by different advisor tiers.

Keywords: Merger; and; acquisition; Investment; bank; reputation; Premium (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:23:y:2009:i:3:p:257-273

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