An Evaluation of Investment Banker Acquisition Advice: The Shareholders' Perspective

Allen Michel, Israel Shaked and You-Tay Lee

Financial Management, 1991, vol. 20, issue 2

Abstract: This paper studies the performance of Drexel Burnham Lambert, First Boston, Goldman Sachs, Morgan Stanley, Salomon Brothers, Shearson Lehman Brothers, and a set of "other" investment bankers in providing merger advice. By determining CARs of target firms, it investigates premiums paid by investment bank clients. To assess the benefit of the acquisition to the acquirer, CARs of acquiring firms are also assessed. The results indicate that Drexel clients pay smaller premiums to acquire their targets than clients of the other investment banks investigated. The results also indicate that the performance of First Boston clients in the period surrounding a merger announcement is dominated by all other investment banks in the sample.

Date: 1991
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