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Top-tier advisors and the market feedback dynamics in cross-border M&As

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  • Adra, Samer
  • Hamadi, Malika
  • Yuan, Jiayi

Abstract

We provide evidence that the presence of top-tier advisors increases managers' propensity to withdraw from cross-border mergers and acquisitions (CBAs) with poor market returns around the announcement. This effect is stronger for private target acquisitions, in which information asymmetry is expected to be more pronounced, and smaller bidders, who are likely to lack the expertise required to process information themselves. This suggests that managers assisted by reputable investment banks consider negative market feedback in informationally challenging deals. Our results are robust to several endogeneity tests. We provide novel inferences about the informative role of stock markets in shaping advisory roles in respect of M&As.

Suggested Citation

  • Adra, Samer & Hamadi, Malika & Yuan, Jiayi, 2023. "Top-tier advisors and the market feedback dynamics in cross-border M&As," International Review of Financial Analysis, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:finana:v:86:y:2023:i:c:s105752192300011x
    DOI: 10.1016/j.irfa.2023.102495
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    More about this item

    Keywords

    Top-tier advisors; Market feedback; Cross-border mergers and acquisitions; Deal cancellation;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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