Advisor Lending to the Advised Acquirer During M&A: Conflict of Interest or Last Resort Financing?

Chong CHEN; Xueping WU

Advisor Lending to the Advised Acquirer During M&A : Conflict of Interest or Last Resort Financing?

Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (without host publication) › peer-review

Overview

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Author(s)

Related Research Unit(s)

Department of Economics and Finance

Detail(s)

Original language	English
Number of pages	63
Publication status	Published - 15 Dec 2016

Conference

Title	29th Australasian Finance and Banking Conference
Location	Shangri-La Hotel Sydney
Place	Australia
City	Sydney
Period	14 - 16 December 2016

Link(s)

	Check@CityULib
Document Link	Links https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2824302 Other version
Permanent Link	https://scholars.cityu.edu.hk/en/publications/publication(667e3d5c-11a5-435f-bd18-e56cd0e86438).html

Abstract

Previous research has shown that acquirers’ M&A announcement effects, on average, become significantly positive if loan financing is involved. We find that when advisors lend to their advised acquirers during M&A deals, the syndicated loan spreads are unusually high, and the advisor-lender dual role significantly reduces the acquirers’ announcement effect. This appears to reflect conflicts of interest, undermining the information production/certification role of loan financing. However, evidence that high need for external finance justifies the expensive advisor lending supports a last-resort-financing explanation instead — investment banks act as a last resort through the advisor-lender dual role in M&A.

Bibliographic Note

Information for this record is supplemented by the author(s) concerned.

Citation Format(s)

[ RIS ] [ BibTeX ]

Advisor Lending to the Advised Acquirer During M&A: Conflict of Interest or Last Resort Financing? / CHEN, Chong ; WU, Xueping.
2016. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (without host publication) › peer-review

CHEN, C & WU, X 2016, 'Advisor Lending to the Advised Acquirer During M&A: Conflict of Interest or Last Resort Financing?', Paper presented at 29th Australasian Finance and Banking Conference, Sydney, Australia, 14/12/16 - 16/12/16. < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2824302>

CHEN, C., & WU, X. (2016). Advisor Lending to the Advised Acquirer During M&A: Conflict of Interest or Last Resort Financing?. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2824302

CHEN C , WU X. Advisor Lending to the Advised Acquirer During M&A: Conflict of Interest or Last Resort Financing?. 2016. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia.

CHEN, Chong ; WU, Xueping. / Advisor Lending to the Advised Acquirer During M&A : Conflict of Interest or Last Resort Financing?. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia.63 p.