The Role of Investment Banks in Acquisitions

Servaes, Henri; Zenner, Marc

doi:10.1093/rfs/9.3.787

Cited by 276 publications

(303 citation statements)

References 36 publications

Supporting

Mentioning

275

Contrasting

Unclassified

Order By: Relevance

“…In complex deals or where the acquirer lacks prior M&A experience, investment bankers are usually appointed (Servaes and Zenner, 1996) to alleviate M&A uncertainty by providing acquirers with advise on target valuation, deal price and structure (Goodman et al, 2014). In a similar vein and more related to our study, Agrawal et al (2013) and Cai and Sevilir (2012) show that shared investment advisors and interlocked directors significantly influence M&A quality by reducing information asymmetry in the M&A transaction.…”

Section: Literature Review and Hypotheses Developmentsupporting

confidence: 70%

Common auditors and cross-country M&A transactions

Chircop

Johan

Tarsalewska

2018

Journal of International Financial Markets, Institutions and Mo

View full text Add to dashboard Cite

Using a comprehensive sample of cross-country mergers and acquisitions for the period 2000 to 2014 we examine the effect of common auditors on the efficiency of cross-country M&A transactions. We predict that the use of common auditors reduces uncertainty, resulting in higher M&A efficiency. We find that this common-auditor effect results in a positive market reaction to the M&A announcement, lower premium and greater increase in return on assets following the M&A transaction. Further, we find that these effects are more pronounced the greater the M&A transaction uncertainty and when the accounting standards of the transacting parties differ.

show abstract

Section: Literature Review and Hypotheses Developmentsupporting

confidence: 70%

Common auditors and cross-country M&A transactions

Chircop

Johan

Tarsalewska

2018

Journal of International Financial Markets, Institutions and Mo

View full text Add to dashboard Cite

show abstract

“…However, McLaughlin (1990McLaughlin ( , 1992 reports that some incentive features of investment banking contracts can create conflicts of interest between an investment bank and its clients, suggesting the importance of a potential for a conflict of interest between advisors and clients in mergers and acquisitions. Servaes and Zenner (1996) compare acquisitions that were completed in-house versus those that use investment bank advisors. They find that an investment bank is used in more complex transactions with asymmetric information, documenting the importance of the information collection process in mergers and acquisitions.…”

Section: Do Advisors Add Value In Mergers?mentioning

confidence: 99%

The Role of Bank Advisors in Mergers and Acquisitions

et al. 2001

View full text Add to dashboard Cite

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.

show abstract

“…In particular, investment bankers frequently aid the acquirer in valuing the target firm and provide assistance in negotiating the deal price and other terms. Servaes and Zenner (1996) find that acquirers retain investment bank advisors when the deals are more complex and when the acquirer lacks prior acquisition experience. Although investment banks often play an advisory role in important phases of the acquisition, the ultimate responsibility for the acquisition valuation process and the final investment decision rests with the acquirer's management.…”

mentioning

confidence: 97%

Management Forecast Quality and Capital Investment Decisions

Goodman

Neamtiu

Shroff

et al. 2013

The Accounting Review

326

199

View full text Add to dashboard Cite

ABSTRACT:Corporate investment decisions require managers to forecast expected future cash flows from potential investments. Although these forecasts are a critical component of successful investing, they are not directly observable by external stakeholders. In this study, we investigate whether the quality of managers' externally reported earnings forecasts can be used to infer the quality of their corporate investment decisions. Relying on the intuition that managers draw on similar skills when generating external earnings forecasts and internal payoff forecasts for their investment decisions, we predict that managers with higher quality external earnings forecasts make better investment decisions. Consistent with our prediction, we find that forecasting quality is positively associated with the quality of both acquisition and capital expenditure decisions. Our evidence suggests that externally observed forecasting quality can be used to infer the quality of capital budgeting decisions within firms.

show abstract

The Role of Investment Banks in Acquisitions

Cited by 276 publications

References 36 publications

Common auditors and cross-country M&A transactions

Common auditors and cross-country M&A transactions

The Role of Bank Advisors in Mergers and Acquisitions

Management Forecast Quality and Capital Investment Decisions

Contact Info

Product

Resources

About