The Role of Bank Advisors in Mergers and Acquisitions

34 Pages Posted: 3 Nov 2008

See all articles by Linda Allen

Linda Allen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Julapa Jagtiani

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Anthony Saunders

New York University - Leonard N. Stern School of Business

Multiple version iconThere are 4 versions of this paper

Date Written: May 2000

Abstract

This paper looks at the role of commercial banks and investment banks as financial advisors. Unlike some areas of investment banking, commercial banks have always been allowed to compete directly with traditional investment banks in this area. In their role as lenders and advisors, banks can be viewed as serving a certification function. However, banks acting as both lenders and advisors face a potential conflict of interest that may mitigate or offset any certification effect. Overall, it is found that, in their merger and acquisition advisory function,the certification effect of commercial banks dominates the conflict of interest effect and that the certification effect is particularly strong when the target s own bank advises merger targets.

Keywords: Relationship banking, investment bank advisors, commercial bank advisors, certification effect,, conflict of interest effect, mergers, acquisitions

Suggested Citation

Allen, Linda and Jagtiani, Julapa A. and Saunders, Anthony, The Role of Bank Advisors in Mergers and Acquisitions (May 2000). NYU Working Paper No. FIN-00-007. Available at SSRN: https://ssrn.com/abstract=1294623

Linda Allen (Contact Author)

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

17 Lexington Avenue
New York, NY 10010
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646-312-3451 (Fax)

HOME PAGE: http://stern.nyu.edu/~lallen

Julapa A. Jagtiani

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

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