The International Diversification of Banks and the Value of their Cross-Border M&A Advice

A. de Jong, S. Ongena, M. van der Poel

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Abstract

This paper investigates the effects of international diversification of banks on the value of their M&A advice. We study bidder returns to 1,253 cross-border M&A announcements. We find that acquirers engaging a more internationally diversified financial advisor generate lower excess returns. Acquirers benefit most from advisors with a greater focus on their home country. These results suggest that the benefits of advisors’ international diversification related to greater economies of scale and scope and the flexibility of allocating deals to the most skilled employee do not outweigh the costs emanating from a lack of country-specific knowledge and greater conflicts of interest.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages49
Volume2010-03
Publication statusPublished - 2010

Publication series

NameEBC Discussion Paper
Volume2010-03

Keywords

  • Bank Diversification
  • Cross-Border Mergers and Acquisitions
  • Advisor Choice

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    de Jong, A., Ongena, S., & van der Poel, M. (2010). The International Diversification of Banks and the Value of their Cross-Border M&A Advice. (EBC Discussion Paper; Vol. 2010-03). EBC.