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Advisors Use Them or Lose Them?

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Do bankers and legal advisors add value to acquisition transactions? This study examines whether their involvement correlates positively with acquirers’ abnormal returns surrounding acquisition announcement. The study also examines whether transaction-specific attributes interact with the presence of acquirers’ bankers to affect acquirers’ abnormal returns. The study examines a sample of 531 full-ownership acquisitions completed between 1988 and 1998. Results indicate involvement of targets’ and acquirers’ experts is detrimental to acquirers' abnormal returns. Investigation of transaction-specific attributes reveals that when acquirers are at an informational and experiential disadvantage, investors are wearier of acquirers’ bankers as is reflected by acquirers’ abnormal returns.

Author(s):

Patrizia Porrini    
LIU Post
United States