The effect of a financial advisor on the performance of the acquiring firm after a M&A deal
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2020-07-15
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en
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The effect of a financial advisor on the performance of the acquiring firm after a M&A deal
Abstract
The objective of this paper was to determine a relationship between financial advisor characteristics and the cumulative abnormal returns (CARs) after a M&A deal. However, this relationship could not be substantiated with the outcomes of this paper. Mostly insignificant results are found regarding the effect of the financial advisor characteristics on the cumulative abnormal returns for acquiring firms. When controlled for the deal characteristics like the method of payment of the deal or the deal structure, these insignificant results continue to exist. For the acquirer and target characteristics, only the strength of the acquiring managers’ position negatively affects the CARs. When we focus on two of the specific advisor characteristics, reputation, and amount of payment, we see that the acquirer’s size and Tobin’s Q positively influence the probability that a top advisor is being chosen. In addition, acquirer’s size and Tobin’s Q also show a positive relation with the amount of advisory fees paid. Overall, this paper does not find significant results that the financial advisors influence the outcomes of the cumulative abnormal returns of the acquiring firm after a M&A deal.
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Faculteit der Managementwetenschappen