INVESTMENT BANKS IN DUAL ROLES: ACQUIRER M&A ADVISORS AS UNDERWRITERS

Mine Ertugrul · Karthik Krishnan

31 citations0/0 files storedThe Journal of Financial Research

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Corporate Finance and Governance Financial Markets and Investment Strategies Private Equity and Venture Capital

Abstract

Abstract We analyze the dual role of investment banks that provide advice to acquiring firms and act as underwriters on the securities issued to finance the acquisition. We find that the dual role of acquirer advisors is associated with lower acquirer announcement returns, higher target announcement returns, higher acquisition premiums, faster completion speeds, and higher divestiture rates. The dual role of the acquirer advisor does not lead to lower underwriting fees or issue costs. Our results are robust to controlling for the endogeneity of selection of the acquirer advisor as underwriter on the security issue used to finance the acquisition.

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References

2001Econometric Analysis of Cross Section and Panel Data 1983Limited-dependent and qualitative variables in econometrics 1997Industry costs of equity 2004Firm size and the gains from acquisitions 1990Do Managerial Objectives Drive Bad Acquisitions?2007Monitoring: Which institutions matter?2002What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions 2005What drives merger waves?

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2016Multiple lead underwriting syndicate and IPO pricing 2018The role of boutique financial advisors in mergers and acquisitions 2016The International Diversification of Banks and the Value of Their Cross-Border M&A Advice

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