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 (no ISBN/ISSN) › peer-review
Author(s)
Related Research Unit(s)
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)
| Document Link | Links |
|---|---|
| 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)
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 (no ISBN/ISSN) › peer-review
