Journal of Investment and Management

| Peer-Reviewed |

Industry Variations of Relationship Banking in Mergers and Acquisitions

Received: 26 November 2015    Accepted: 05 December 2015    Published: 14 December 2015
Views:       Downloads:

Share This Article

Abstract

In this study we examine the acquirer-advisor relation in mergers and acquisitions. Among other issues we study the effect of this relation in major industry sectors. We have found that the average log abnormal return from acquirer-advisor relation is $0.5 millions. Relationship advisers are rewarding in the range of $1.5 millions to $2.5 millions in all sectors except media, consumer products and services, high technology, industrials and real estate.

DOI 10.11648/j.jim.20150406.25
Published in Journal of Investment and Management (Volume 4, Issue 6, December 2015)
Page(s) 409-418
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Mergers and Acquisitions, Relationship Advisers, Relationship Banking, M & A Advising

References
[1] Allen, F. (1990). The market for information and the origin of financial intermediation, J. Finan. Intermed. 1, 3–30.
[2] Allen, L., J. Jagtiani, S. Preistiani, and A. Saunders. (2004). The role of commercial bank advisors in mergers and acquisitions, Journal of Money, Credit, and Banking, 36, No. 2.
[3] Berger, A. (1999). The ‘Big Picture’ of relationship finance, in “Business Access to Capital and Credit” (J. L. Blanton, A. Williams, and S. L. Rhine, Eds.), pp. 390–400. A Federal Reserve System Research Conference.
[4] Berger, A. N., R. S. Demsetz, and P. E. Strahan. (1999) “The Consolidation of the Financial Services Industry: Causes, Consequences, and Implications for the Future,” Journal of Banking and Finance. 23, 135-194.
[5] Berger, A., Saunders, A., Scalise, J. M., and G. F. Udell (1998). The effects of bank mergers and acquisitions on small business lending, J. Finan. Econ. 50, 187–230.
[6] Berger, P. G., and E. Ofek. (1995) “Diversification’s Effect on Firm Value,” J. Finan. Econ. 37, 39-65.
[7] Bhattacharaya, S., and Chiesa, G. (1995). Proprietary information, financial intermediation, and research incentives, J. Finan. Intermed. 4, 328–357.
[8] Bolton, P., and Scharfstein, D. S. (1996). Optimal debt structure and the number of creditors, J. Polit. Econ. 104, 1–25.
[9] Boot, Arnoud W. (2000) “Relationship Banking: What Do We Know?” J. Finan. Intermed. 9, 7-25.
[10] Boot, A. W. A., and Thakor, A. V. (1994). Moral hazard and secured lending in an infinitely repeated credit market game, Int. Econ. Rev. 35, 899–920.
[11] Bruner, R. (2002) Does M & A pay? A survey of evidence for the decision-maker, Journal of Applied Finance. Vol. 12, pp. 48–68.
[12] Chan, Y., Greenbaum, S. I., and Thakor, A. V. (1986). Information reusability, competition and bank asset quality, J. Banking Finance 10, 255–276.
[13] Chang, X., Shekhar, C., Tam, L., & Zhu, A. (2010). Prior relationship, industry expertise, information leakage, and the choice of M & A advisor. SSRN Working Paper Series.
[14] Francis, B. B., Hasan, I., & Sun, X. (2014). Does relationship matter? The choice of financial advisors. Journal of Economics and Business, 73, 22-47.
[15] Degryse, H., and van Cayseele, P. (2000). Relationship lending within a bank-based system: Evidence from European small business data, J. Finan. Intermed. 9, 90–109.
[16] DeLong, Gayle (2001), “Stockholder Gains from Focusing versus Diversifying Bank Mergers.” Journal of Financial Economics 59: 2 (February), 221-252.
[17] Diamond, D. (1984). Financial intermediation and delegated monitoring, Rev. Econ. Stud. 51, 393–414.
[18] Hoshi, T., Kashyap, A., and Scharfstein, D. (1993). “The Choice between Public and Private Debt: An Analysis of Post-deregulation Corporate Financing in Japan,” NBER Working Paper, 4421.
[19] Ismail, A. (2010). Are good financial advisors really good? The performance of investment banks in the M & A market. Review of Quantitative Finance and Accounting, 35(4), 411-429.
[20] Kisgen, D. J., & Song, W. (2009). Are fairness opinions fair? The case of mergers and acquisitions. Journal of Financial Economics, 91(2), 179-207.
[21] Kolasinski, A. C., & Kothari, S. P. (2008). Investment banking and analyst objectivity: Evidence from analysts affiliated with mergers and acquisitions advisors. Journal of Financial and Quantitative Analysis, 43(04), 817-842.
[22] Rajan, R. (1992). Insiders and outsiders: The choice between relationship and arms length debt, J. Finance 47, 1367–1400.
[23] Ramakrishnan, R. T. S., and Thakor, A. V. (1984). Information reliability and a theory of financial intermediation, Rev. Econ. Stud. 51, 415–432.
[24] Rau, P. R. (2000) Investment bank market share, contingent fee payments, and the performance of acquiring firms, Journal of Financial Economics 56, 293-324.
[25] Rau, R. P., and T. Vermaelen. (1998) Glamour, value and the post-acquisition performance of acquiring firms, Journal of Financial Economics 49, 223-253.
[26] Sharpe, S. (1990). Asymmetric information, bank lending and implicit contracts: A stylized model of customer relationships, J. Finance 45, 1069–1087.
[27] Song, W., Wei, J. D., & Zhou, L. (2013). The value of “boutique” financial advisors in mergers and acquisitions. Journal of Corporate Finance, 20, 94-114.
[28] Winton, A. (1995). Delegated monitoring and bank structure in a finite economy, J. Finan. Intermed. 4, 158–187.
Author Information
  • Department of Banking and Finance, Bursa Orhangazi University, Bursa, Turkey

Cite This Article
  • APA Style

    Zeynep Topaloglu. (2015). Industry Variations of Relationship Banking in Mergers and Acquisitions. Journal of Investment and Management, 4(6), 409-418. https://doi.org/10.11648/j.jim.20150406.25

    Copy | Download

    ACS Style

    Zeynep Topaloglu. Industry Variations of Relationship Banking in Mergers and Acquisitions. J. Invest. Manag. 2015, 4(6), 409-418. doi: 10.11648/j.jim.20150406.25

    Copy | Download

    AMA Style

    Zeynep Topaloglu. Industry Variations of Relationship Banking in Mergers and Acquisitions. J Invest Manag. 2015;4(6):409-418. doi: 10.11648/j.jim.20150406.25

    Copy | Download

  • @article{10.11648/j.jim.20150406.25,
      author = {Zeynep Topaloglu},
      title = {Industry Variations of Relationship Banking in Mergers and Acquisitions},
      journal = {Journal of Investment and Management},
      volume = {4},
      number = {6},
      pages = {409-418},
      doi = {10.11648/j.jim.20150406.25},
      url = {https://doi.org/10.11648/j.jim.20150406.25},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.jim.20150406.25},
      abstract = {In this study we examine the acquirer-advisor relation in mergers and acquisitions. Among other issues we study the effect of this relation in major industry sectors. We have found that the average log abnormal return from acquirer-advisor relation is $0.5 millions. Relationship advisers are rewarding in the range of $1.5 millions to $2.5 millions in all sectors except media, consumer products and services, high technology, industrials and real estate.},
     year = {2015}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Industry Variations of Relationship Banking in Mergers and Acquisitions
    AU  - Zeynep Topaloglu
    Y1  - 2015/12/14
    PY  - 2015
    N1  - https://doi.org/10.11648/j.jim.20150406.25
    DO  - 10.11648/j.jim.20150406.25
    T2  - Journal of Investment and Management
    JF  - Journal of Investment and Management
    JO  - Journal of Investment and Management
    SP  - 409
    EP  - 418
    PB  - Science Publishing Group
    SN  - 2328-7721
    UR  - https://doi.org/10.11648/j.jim.20150406.25
    AB  - In this study we examine the acquirer-advisor relation in mergers and acquisitions. Among other issues we study the effect of this relation in major industry sectors. We have found that the average log abnormal return from acquirer-advisor relation is $0.5 millions. Relationship advisers are rewarding in the range of $1.5 millions to $2.5 millions in all sectors except media, consumer products and services, high technology, industrials and real estate.
    VL  - 4
    IS  - 6
    ER  - 

    Copy | Download

  • Sections