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WHY BIDDING FIRMS DO NOT HIRE FINANCIAL ADVISORS IN MERGERS AND ACQUISITIONSDownload This Article
Wallace N. Davidson III, Shenghui Tong, Richard Proctor
In this paper, we examine why some bidders decide not to hire investment bank advisors in M&A transactions. We build a sample of 181 M&A transactions in which the acquiring firms do not hire investment bank advisors, and compare them with a control sample of 181 M&A transactions in which the acquiring firms hire investment bank advisors. We find that the transaction costs are the primary reason that investment banks are hired as advisors for bidders in M&A transactions. In addition, the information asymmetry and contracting costs are the other two reasons that bidders hire investment banks in M&A transactions.
Keywords: Mergers, Acquisitions, Investment Banks
How to cite this paper: Davidson III, W. N., Tong, S., & Proctor, R. (2008). Why bidding firms do not hire financial advisors in mergers and acquisitions. Corporate Ownership & Control, 5(3-2), 316-323. http://doi.org/10.22495/cocv5i3c2p7