How Much Does Your Banker’s Target-Specific Experience Matter? Evidence from Target IPO Underwriters that Advise Acquirers

Richard Herron ()
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Richard Herron: Northeastern University

Journal of Financial Services Research, 2022, vol. 61, issue 2, No 3, 217-258

Abstract: Abstract In a sample of 1,507 US all-public acquisitions from 1985–2014, 5% of acquirers use the same advisor that underwrote the target’s initial public offering. Acquirers who use these informed advisors have acquisition announcement three-day cumulative abnormal returns (CARs) that are 2.048 percentage points higher, all else equal. Same-advisor acquisition announcements have higher combined CARs but not lower target CARs, suggesting higher synergies instead of lower deal premia. Same-advisor acquisition announcement outperformance decays as the target ages and grows. These findings show the value and timeliness of investment bank information production, retention, and transfer.

Keywords: Mergers; Acquisitions; Investment banking (search for similar items in EconPapers)
JEL-codes: G24 G34 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10693-020-00346-5

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