The International Diversification of Banks and the Value of their Cross-Border M&A Advice
AbstractThis paper investigates the effects of international diversification of banks on the value of their M&A advice. We study bidder returns to 1,253 cross-border M&A announcements. We find that acquirers engaging a more internationally diversified financial advisor generate lower excess returns. Acquirers benefit most from advisors with a greater focus on their home country. These results suggest that the benefits of advisors’ international diversification related to greater economies of scale and scope and the flexibility of allocating deals to the most skilled employee do not outweigh the costs emanating from a lack of country-specific knowledge and greater conflicts of interest.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2010-24.
Date of creation: 2010
Date of revision:
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Web page: http://center.uvt.nl
Bank Diversification; Cross-Border Mergers and Acquisitions; Advisor Choice;
Other versions of this item:
- De Jong, Abe & Ongena, Steven & van der Poel, Marieke, 2010. "The international diversification of banks and the value of their cross-border M&A advice," CEPR Discussion Papers 7735, C.E.P.R. Discussion Papers.
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-BAN-2010-05-02 (Banking)
- NEP-COM-2010-05-02 (Industrial Competition)
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