Abstract

http://ssrn.com/abstract=1567370
 
 

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When It Pays to Pay Your Investment Banker: New Evidence on the Role of Financial Advisors in M&As


Andrey Golubov


City University London - Sir John Cass Business School

Dimitris Petmezas


University of Surrey - Surrey Business School

Nickolaos G. Travlos


ALBA Graduate Business School

November 15, 2011

Journal of Finance, Forthcoming

Abstract:     
We provide new evidence on the role of financial advisors in M&As. Contrary to prior studies, top-tier advisors deliver higher bidder returns than their non-top-tier counterparts but in public acquisitions only, where the advisor reputational exposure and required skills set are relatively larger. This translates into 65.83 US$ million shareholder gain for an average bidder. The improvement comes from top-tier advisors’ ability to identify more synergistic combinations and to get a larger share of synergies to accrue to bidders. Consistent with the premium price – premium quality equilibrium, top-tier advisors charge premium fees in these transactions.

Number of Pages in PDF File: 60

Keywords: Investment Banks, Reputation, Mergers and Acquisitions, Abnormal Returns, Advisory Fees, Deal Completion, Self-Selection Bias, Organizational Form

JEL Classification: G14, G24, G34

Accepted Paper Series





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Date posted: March 10, 2010 ; Last revised: November 16, 2011

Suggested Citation

Golubov, Andrey and Petmezas, Dimitris and Travlos, Nickolaos G., When It Pays to Pay Your Investment Banker: New Evidence on the Role of Financial Advisors in M&As (November 15, 2011). Journal of Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1567370

Contact Information

Andrey Golubov
City University London - Sir John Cass Business School ( email )
106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 (0)20 7040 0965 (Phone)
+44 (0)20 7040 8881 (Fax)
HOME PAGE: http://www.cass.city.ac.uk/experts/a.golubov
Dimitris Petmezas
University of Surrey - Surrey Business School ( email )
Guildford, Surrey GU2 7XH
United Kingdom
Nickolaos G. Travlos (Contact Author)
ALBA Graduate Business School ( email )
Athinas Ave. & 2A Areos Str.
Vouliagmeni 166 71, Athens
Greece
HOME PAGE: http://www.alba.edu.gr
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