Industry expertise, information leakage and the choice of M&A advisors

Chang, Xin, Shekhar, Chander, Tam, Lewis H.K and Yao, Jinquan 2016, Industry expertise, information leakage and the choice of M&A advisors, Journal of business finance & accounting, vol. 43, no. 1-2, pp. 191-225, doi: 10.1111/jbfa.12165.

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Title Industry expertise, information leakage and the choice of M&A advisors
Author(s) Chang, XinORCID iD for Chang, Xin
Shekhar, Chander
Tam, Lewis H.K
Yao, Jinquan
Journal name Journal of business finance & accounting
Volume number 43
Issue number 1-2
Start page 191
End page 225
Total pages 35
Publisher Wiley-Blackwell Publishing Ltd.
Place of publication Oxford, Eng.
Publication date 2016-01
ISSN 0306-686X
Keyword(s) investment banking
mergers and acquisitions
advisory fees
advisory services
industry expertise
Summary This paper examines the impacts of M&A advisors’ industry expertise on firms’choice of advisors in mergers and acquisitions. We show that an investment bank’s expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counter party. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in thesame industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.
Language eng
DOI 10.1111/jbfa.12165
Field of Research 150205 Investment and Risk Management
1501 Accounting, Auditing And Accountability
1502 Banking, Finance And Investment
Socio Economic Objective 970115 Expanding Knowledge in Commerce
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
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Document type: Journal Article
Collections: Faculty of Business and Law
Department of Finance
2018 ERA Submission
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