Investment Bank Expertise in Cross-Border Mergers and Acquisitions

50 Pages Posted: 5 Dec 2015 Last revised: 10 Jan 2017

See all articles by Matteo P. Arena

Matteo P. Arena

Marquette University

Michaël Dewally

Towson University - Department of Finance

Date Written: January 3, 2017

Abstract

We study the influence of country expertise of investment banks in facilitating cross-border merger deals by analyzing a large international sample of M&A deals. We provide evidence that the geographical proximity, cultural affinity, and local experience of investment banks advising bidding firms on cross-border M&A deals significantly decrease the time to completion required to complete the deal, significantly increase the probability of completion of the deal and the operating performance of the acquiring firm after the deal. The cultural affinity between the bank and the target country and the expertise of the acquirer on the target country have also a significant positive effect on the stock market reaction at the announcement of the deal. Our results are robust to firm, deal, country specific factors, and endogeneity concerns.

Keywords: Mergers & acquisitions, Investment Banks, Geography, Cultural values, International, Cross-border

JEL Classification: F23, G24, G34, Z1

Suggested Citation

Arena, Matteo P. and Dewally, Michaël, Investment Bank Expertise in Cross-Border Mergers and Acquisitions (January 3, 2017). Journal of Financial Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2698417 or http://dx.doi.org/10.2139/ssrn.2698417

Matteo P. Arena (Contact Author)

Marquette University ( email )

College of Business Administration
P.O. Box 1881
Milwaukee, WI 53201-1881
United States

Michaël Dewally

Towson University - Department of Finance ( email )

8000 York Road
Suite 316 L
Baltimore, MD 21252-0001
United States
410-704-4902 (Phone)

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