Home preference at selecting financial advisors in cross-border M&As

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Title: Home preference at selecting financial advisors in cross-border M&As
ISBN: 978-952-462-822-8
Author: Francis, Bill B. ; Hasan, Iftekhar ; Sun, Xian
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
ISSN: 1456-6184
Series year: 2012
Series number: 31/2012
Year of publication: 2012
Publication date: 29.10.2012
Published in: Published in International Review of Financial Analysis, Volume 32, March 2014, Pages 143-158
DOI: 10.1016/j.irfa.2014.01.003
Pages: 52 s.
Keywords: kansainvälinen; fuusiot; yrityskaupat; USA; sijoituspankit; yritykset; rahoituslaitokset; pankkitoiminta; neuvonantajat; välittäjät
Abstract: This paper examines the determinants of the choice of financial advisors and their impact on the announcement effects of US acquirers in cross-border M&As. Two hypotheses are tested: one pertains to the acquiring firms' home preference in selecting financial advisors, and the other relates to advisors' experience in target countries. Evidence supports the home preference hypothesis in the selection of advisors in cross-border M&As, particularly in all-cash paid transactions where acquirers take the entire risk of not realizing the expected synergy value. We also observe home preference among investors as acquirers that picked US advisors experience significantly higher positive abnormal returns in all-cash paid transactions than those without US advisors, even when the chosen US advisors do not have significant experience in the target country. Finally, home preference at the choice of financial advisor may be costly if US acquirers pass by more experienced because of home preference.
Rights: https://helda.helsinki.fi/bof/copyright


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