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Managerial rights, use of investment banks, and the wealth effects for acquiring firms' shareholders

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  • Wang, Weishen
  • Whyte, Ann Marie

Abstract

We examine the relation between managerial rights in acquiring firms and the decision to use an investment bank in merger and acquisition deals, and explore whether this relation impacts the wealth effects for acquiring firms' shareholders. We find that acquiring firms whose managers have relatively strong rights are more likely to use investment banks to facilitate deals and are more likely to use reputable banks. The wealth effects to acquiring firms are inversely related to the use of investment banks when managerial rights are relatively strong. However, the wealth loss is mitigated when acquiring firms use reputable investment banks.

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  • Wang, Weishen & Whyte, Ann Marie, 2010. "Managerial rights, use of investment banks, and the wealth effects for acquiring firms' shareholders," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 44-54, January.
  • Handle: RePEc:eee:jbfina:v:34:y:2010:i:1:p:44-54
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    Cited by:

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    3. Tatyana Sokolyk, 2015. "Governance provisions and managerial entrenchment: evidence from CEO turnover of acquiring firms," Review of Quantitative Finance and Accounting, Springer, vol. 45(2), pages 305-335, August.
    4. Kai-Shi Chuang, 2017. "The role of investment banks on the impact of firm performance in mergers and acquisitions: evidence from the Asia-Pacific market," Review of Quantitative Finance and Accounting, Springer, vol. 48(3), pages 677-699, April.
    5. Johannes Kolb, 2019. "Do investment banks create value for their clients? Empirical evidence from European acquisitions," European Financial Management, European Financial Management Association, vol. 25(1), pages 80-115, January.
    6. Chen, Sheng-Syan & Chou, Robin K. & Lee, Yun-Chi, 2011. "Bidders' strategic timing of acquisition announcements and the effects of payment method on target returns and competing bids," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2231-2244, September.
    7. Chuang, Kai-Shi, 2014. "Financial advisors, financial crisis, and shareholder wealth in bank mergers," Global Finance Journal, Elsevier, vol. 25(3), pages 229-245.
    8. Chen, Chao & Shi, Haina & Xu, Haoping, 2014. "The IPO underwriting market share in China: Do ownership and quality matter?," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 177-189.

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