The International Diversification of Banks and the Value of Their Cross-Border M&A Advice

50 Pages Posted: 17 Mar 2010

See all articles by Abe de Jong

Abe de Jong

Rotterdam School of Management, Erasmus University; Monash University

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Marieke van der Poel

Erasmus University - Rotterdam School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: March 2010

Abstract

This paper investigates the effects of international diversification of banks on the value of their M&A advice. We study bidder returns to 1,253 cross-border M&A announcements. We find that acquirers engaging a more internationally diversified financial advisor generate lower excess returns. Acquirers benefit most from advisors with a greater focus on their home country. These results suggest that the benefits of advisors’ international diversification related to greater economies of scale and scope and the flexibility of allocating deals to the most skilled employee do not outweigh the costs emanating from a lack of country-specific knowledge and greater conflicts of interest.

Keywords: Advisor Choice, Bank Diversification, Cross-Border Mergers and Acquisitions

JEL Classification: G24, G34

Suggested Citation

de Jong, Abe and Ongena, Steven R. G. and van der Poel, Marieke, The International Diversification of Banks and the Value of Their Cross-Border M&A Advice (March 2010). CEPR Discussion Paper No. DP7735. Available at SSRN: https://ssrn.com/abstract=1573439

Abe De Jong (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-25
Rotterdam, 3000 DR
Netherlands
+31 10 408 1022 (Phone)

HOME PAGE: http://https://www.rsm.nl/people/abe-de-jong/

Monash University ( email )

900 Dandenong Rd
Room H3-56
Caulfield East, Victoria 3145
Australia

HOME PAGE: http://https://research.monash.edu/en/persons/abe-de-jong

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Marieke Van der Poel

Erasmus University - Rotterdam School of Management ( email )

P.O. Box 1738
Room T09-43
Rotterdam, 3000 DR
Netherlands
+31 10 4081528 (Phone)
+31 10 4089017 (Fax)

HOME PAGE: http://www.rsm.nl/mvanderpoel

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
3
Abstract Views
625
PlumX Metrics