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

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

Research output: Working paperDiscussion paperOther research output

315 Downloads (Pure)

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
PublisherFinance
Number of pages49
Volume2010-24
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-24

Fingerprint

Cross-border
Advisors
International diversification
Announcement
Employees
Conflict of interest
Economies of scale and scope
Financial adviser
Excess returns
Home country
Costs

Keywords

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

Cite this

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. (CentER Discussion Paper; Vol. 2010-24). Tilburg: Finance.
de Jong, A. ; Ongena, S. ; van der Poel, M. / The International Diversification of Banks and the Value of their Cross-Border M&A Advice. Tilburg : Finance, 2010. (CentER Discussion Paper).
@techreport{ea11bb13364546ffa9a3b0dd51418b52,
title = "The International Diversification of Banks and the Value of their Cross-Border M&A Advice",
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.",
keywords = "Bank Diversification, Cross-Border Mergers and Acquisitions, Advisor Choice",
author = "{de Jong}, A. and S. Ongena and {van der Poel}, M.",
note = "This is also EBC Discussion Paper 2010-03 Pagination: 49",
year = "2010",
language = "English",
volume = "2010-24",
series = "CentER Discussion Paper",
publisher = "Finance",
type = "WorkingPaper",
institution = "Finance",

}

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' CentER Discussion Paper, vol. 2010-24, Finance, Tilburg.

The International Diversification of Banks and the Value of their Cross-Border M&A Advice. / de Jong, A.; Ongena, S.; van der Poel, M.

Tilburg : Finance, 2010. (CentER Discussion Paper; Vol. 2010-24).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - The International Diversification of Banks and the Value of their Cross-Border M&A Advice

AU - de Jong, A.

AU - Ongena, S.

AU - van der Poel, M.

N1 - This is also EBC Discussion Paper 2010-03 Pagination: 49

PY - 2010

Y1 - 2010

N2 - 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.

AB - 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.

KW - Bank Diversification

KW - Cross-Border Mergers and Acquisitions

KW - Advisor Choice

M3 - Discussion paper

VL - 2010-24

T3 - CentER Discussion Paper

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

PB - Finance

CY - Tilburg

ER -

de Jong A, Ongena S, van der Poel M. The International Diversification of Banks and the Value of their Cross-Border M&A Advice. Tilburg: Finance. 2010. (CentER Discussion Paper).