Abstract

http://ssrn.com/abstract=1913001
 
 

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Industry Expertise, Information Leakage, and the Choice of M&A Advisors


Xin (Simba) Chang


Nanyang Business School

Chander Shekhar


University of Melbourne; Financial Research Network (FIRN)

Lewis Tam


University of Macau

Jiaquan Yao


Xiamen University

July 21, 2013

24th Australasian Finance and Banking Conference 2011 Paper

Abstract:     
This paper examines the impacts of M&A advisor’s industry expertise on firm’s choice of financial advisors in mergers and acquisitions. We show that an investment bank's industry expertise increases its likelihood of being chosen as an advisor, especially in horizontal mergers, when the acquisition is more complex, and when firms have less prior acquisition experience. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in the same industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.

Number of Pages in PDF File: 42

Keywords: Investment banking, Mergers and Acquisitions, Advisory Fees, Advisory Services

JEL Classification: G24, G34, L11

working papers series


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Date posted: August 20, 2011 ; Last revised: July 30, 2013

Suggested Citation

Chang, Xin (Simba) and Shekhar, Chander and Tam, Lewis and Yao, Jiaquan, Industry Expertise, Information Leakage, and the Choice of M&A Advisors (July 21, 2013). 24th Australasian Finance and Banking Conference 2011 Paper. Available at SSRN: http://ssrn.com/abstract=1913001 or http://dx.doi.org/10.2139/ssrn.1913001

Contact Information

Xin Chang
Nanyang Business School ( email )
S3-B1B-76 Nanyang Avenue
Singapore, 639798
Singapore
HOME PAGE: http://www.ntu.edu.sg/home/changxin
Chander Shekhar
University of Melbourne ( email )
Melbourne, Victoria 3010
Australia
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Lewis Tam
University of Macau ( email )
Macau
Jiaquan Yao (Contact Author)
Xiamen University ( email )
Xiamen, Fujian 361005
China
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