Law Firm Expertise and Shareholder Wealth

46 Pages Posted: 17 Dec 2019 Last revised: 16 Feb 2021

See all articles by Denis Schweizer

Denis Schweizer

Concordia University

Ge Wu

University of Richmond

Date Written: June 28, 2020


This paper examines the impact of law firm expertise on bidder and target shareholder wealth gains during mergers and acquisitions. After controlling for endogeneity in the matching between the mandating firm (bidder or target firm) and the law firm, we find that top-tier law firms increase the wealth of bidder shareholders by an average of 2.00% ($30.80 million) to 3.07% ($47.28 million), but not that of target firm shareholders. Interestingly, we find no evidence that the reputation of the investment bank is related to bidder or target shareholder wealth gains. Our findings suggest that top-tier lawyers are effective “transaction cost engineers.” They create value for their clients by structuring deals to minimize transaction and regulatory costs.

Keywords: Acquisition, Legal Advisory, Law Firm, M&A, Merger Clause, Takeover Premium

JEL Classification: G14, G24, G34

Suggested Citation

Schweizer, Denis and Wu, Ge, Law Firm Expertise and Shareholder Wealth (June 28, 2020). Available at SSRN: or

Denis Schweizer (Contact Author)

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)


Ge Wu

University of Richmond ( email )

102 UR Drive
Richmond, VA 23173
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics