Individual financial advisor's reputation concern and M&A performance: Evidence from China

Huaili Lyu, Wenming WANG*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Using a sample of mergers & acquisitions (M&A) undertaken by listed firms in China, this study examines whether and how the reputation concerns of individual financial advisors affect M&A outcomes. We find that acquiring firms tend to pay lower premium for the target in the M&A deals advised by individual financial advisors with higher reputation at stake. M&A deals advised by individual financial advisors with higher reputation concerns are more likely to be completed. Our results survive the endogeneity tests. Further analyses reveal that individual financial advisors with higher reputation concerns are positively associated with long-run post-M&A performance as well. Our findings indicate that reputation concerns play an important role in motivating individual financial advisors to deliver high-quality M&A advisory services. This study contributes to an emerging literature on the role of individual financial advisors in M&A activities.

Original languageEnglish
Article number101281
JournalPacific Basin Finance Journal
Volume60
DOIs
Publication statusPublished - Apr 2020

Scopus Subject Areas

  • Finance
  • Economics and Econometrics

User-Defined Keywords

  • Individual financial advisor
  • Initial public offering (IPO)
  • Mergers and acquisitions (M&A)
  • Reputation concern

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