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The role of bank advisors in mergers and acquisitions

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Author Info

  • Linda Allen
  • Julapa Jagtiani
  • Stavros Peristiani
  • Anthony Saunders

Abstract

This paper looks at the role of both commercial and investment banks in providing merger advisory services. In this area, unlike some areas of investment banking, commercial banks have always been allowed to compete directly with investment banks. In their dual role as lenders and advisors to firms that are the target or the acquirer in a merger, 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, we find evidence supporting the certification effect for target firms. In contrast, conflicts of interest appear to dominate the certification effect when banks are advisors to acquirers.

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Bibliographic Info

Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 143.

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Date of creation: 2002
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Handle: RePEc:fip:fednsr:143

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Keywords: Banks and banking ; Bank mergers;

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References

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Citations

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Cited by:
  1. Jayaraman Vijayakumar & Kenneth Daniels, 2006. "The Role and Impact of Financial Advisors in the Market for Municipal Bonds," Journal of Financial Services Research, Springer, Springer, vol. 30(1), pages 43-68, August.
  2. Jong, A. de & Ongena, S. & Poel, M. van der, 2010. "The International Diversification of Banks and the Value of their Cross-Border M&A Advice," Discussion Paper, Tilburg University, Center for Economic Research 2010-24, Tilburg University, Center for Economic Research.
  3. Jandik, Tomas & Makhija, Anil K., 2005. "The Impact of the Structure of Debt on Target Gains," Working Paper Series 2005-5, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
  4. Quan Hoang Vuong & Tran Tri Dung & Thi Chau Ha NguyenN, 2009. "Mergers and Acquisitions in Vietnam’s Emerging Market Economy, 1990-2009," Working Papers CEB, ULB -- Universite Libre de Bruxelles 09-045.RS, ULB -- Universite Libre de Bruxelles.
  5. Kenneth Daniels & Richard A. Phillips, 2007. "The Valuation Impact of Financial Advisors: An Empirical Analysis of REIT Mergers and Acquisitions," Journal of Real Estate Research, American Real Estate Society, American Real Estate Society, vol. 29(1), pages 57-64.

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