شهرت و اعتبار بانک سرمایه گذاری و اثرات ثروت سهامداران در مالکیت و ادغام

This paper investigates the relationship between the reputation of investment banks employed in mergers and acquisitions transactions and the resulting wealth effects. Two hypotheses are tested: the superior deal hypothesis, stating that high reputation advisors suggest deals with higher overall transaction gains; and the bargaining advantage hypothesis, stating that the larger share of transaction benefits is attributed to the party employing a highly reputed advisor. Evidence from 285 European M&A-transactions announced between 1997 and 2002 does not support any of these hypotheses. On average, wealth effects are not significantly different for transactions advised by different advisor tiers.

Most market participants would agree that investment banks play an important role in advising their clients in the mergers and acquisitions process. McLaughlin (1990), among others, summarizes three core activities that M&A-advisors perform for their clients: (i) identifying potential bidders and targets, (ii) working to complete offers, seeking higher bids, defending against hostile offers, and negotiating, (iii) advising on bidding strategy, on the offer price, on the accept/reject decision, and evaluating the potential for competitive bids. In addition, practitioners emphasize the role of investment banks in providing liquidity and therefore an increase in efficiency on the market for corporate control. The role of investment banks advising clients in corporate finance transactions has been subject to a large body of research since the early 1970s. Whereas the vast majority of the existing research focuses on the underwriting business (e.g., Chalmers et al., 2002, Garner and Kale, 2001, Hansen, 2001, Dunbar, 2000 and Krigman et al., 2000), the role of investment banks in mergers and acquisitions is less well covered. Almost all studies that focus on mergers and acquisitions examine only M&A transactions in the United States. As the US market is very mature and M&A activity rather high it is not always possible for a client within this market environment to take the advice of his most preferred investment bank because this advisor might have some conflicts of interest which prohibit the mandate. In less mature markets with less M&A activity the probability of conflicts of interests should be significantly lower and potential influence of the investment banks on M&A outcome should be less biased. The main objective of this paper is to investigate the shareholder wealth effects of investment banks in a sample of European M&A transactions during a period of still developing markets. Until a few years ago the relative share of M&A transactions accompanied by investment banks was by far smaller in the European market than in the US. For the US, Kale et al. (2003) and Allen et al. (2004) document that 88%, respectively 84%, of all transactions are performed under the guidance of an investment bank for the acquiring company. Based on reports of Thomson Financial this ratio is only 12% in Germany in 2000. We expect to find more extreme differences in stock market returns between high quality and medium quality investment banks in Europe. The paper is organized as follows. First, the existing body of literature relating to shareholder wealth effects of employing M&A-advisors is introduced. Next, the research hypotheses are derived and the data set and the methodology are described. In the subsequent section the empirical results are presented. The last section concludes and discusses the implications of the results for companies planning to involve in an M&A-transaction.

We investigate the difference in wealth creation by mergers and acquisitions as a function of the advisor tier employed by the bidder and the target. Advisor tier is defined as the adherence to a specific group in published advisory league tables; the banks that occupy the top-five slots in a 3-year average ranking are considered 1st-tier advisors, the remaining advisors are classified as ‘others’. Based on a sample of 307 European transactions, we examine differences in the average wealth creation for deals that are advised by the different advisor tiers. Specifically, we investigate whether 1st-tier bidder advisors find and suggest superior deals in terms of total wealth creation available to bidding firms’ and target firms’ shareholders, and whether any party in the transaction derives a bargaining advantage from the utilization of a 1st-tier advisor. We find that the choice of a specific advisor tier is related to specific deal characteristics, such as transaction volume, bidder size and target size. We also document that the level of returns to bidders and targets cannot be explained by the absolute size of the firms, whereas the size ratio of the bidding firm market value to the target firm market value is positively correlated with target returns.Weempiricallyanalyzethesuperiordealhypothesis,whichstatesthat1st-tierbidderadvisorsfind and suggest deals that release superior economic value, measured as the combined announcement period wealth gains. There is no evidence for a significant difference in the average combined wealth gains between transactions where the bidding firm is advised by a 1st-tier advisor and those where ‘other’ advisors are employed. The superior deal hypothesis is therefore not supported. These results are similar to those presented by Rau (2000) , who shows that investment bank market share is not related to the post-acquisition performance of acquirers advised by the bank in the past. Furthermore, inconsistent with the bargaining advantage hypothesis, there is no significant differ- ence in the share of benefits from the transaction that is attributed to any of the parties for different advisor tiers. If the bargaining advantage hypothesis holds, the party that employs a 1st-tier advisor would receive a larger share of the economic benefits from the transaction. For the case of the target, this share is expressed as the premium paid to target firms’ shareholders over the pre-announcement share price, whereas the bidding firms’ shareholders receive the residual of the economic gains from the transaction minus the premium paid to target shareholders. The bidder advisor therefore has two ways to increase his client’s wealth, by suggesting superior deals and by negotiating a premium that maximizestheresidualgainavailabletobiddingfirms’shareholders.Noevidenceisfoundthatbidders that employ 1st-tier advisors receive significantly larger residuals, nor do they pay significantly lower premiums to target firms’ shareholders. On the other hand, target firms’ shareholders do not receive higher premiums when they are advised by a 1st-tier bank as opposed to other banks. Lastly, bidder returns are not consistently smaller when the target is advised by a 1st-tier advisor. The inclusion of theadvisorreputationdummyvariableinalinearregressionofabnormalreturnsdoesnotincreasethe explanatory power of the model; these findings do not support the bargaining advantage hypothesis.