Advisor reputation and bidder announcement returns in mergers and acquisitions

Abstract

I examine the effect of bidder advisor reputation on bidder announcement returns in M&A using a sample of 2 244 European transactions announced between 1995 and 2019. Consistent with Schiereck, Sigl-Grüb and Unverhau (2009), I do not find evidence of bidders with reputable advisors experiencing higher announcement returns. Additionally, I examine the effect of bidder advisors’ industry-specific reputation on bidder announcement returns. I do not find consistent evidence of higher announcement returns to bidders that hire advisors with industry-specific reputation. While a statistically significant increase of 0.010 in bidder cumulative abnormal returns can be found in a 1995-2012 subsample, this effect is not present in later periods. My results are robust to different event windows and variable definitions.