Abstract
This study tests the hypothesis that certification is an important service performed by M&A (merger and acquisition) advisors. It conducts an empirical investigation of the relationship between corporate ownership and the decision to hire an advisor. It demonstrates that ownership by institutional investors increases the propensity of firms to hire advisors in merger and acquisition transactions. The effect is (1) nonlinear in institutional investor percentage ownership, (2) greater for the selling firm than for the buyer, and (3) stronger where control is changing than where significant assets are being bought and sold. Confirmation of the certification hypothesis is also found in the decision to hire a prestigious advisor given that an advisor is to be hired.
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Thomas, H.A. Effects of firm owenership structure on hiring of M&A advisors. J Finan Serv Res 9, 159–175 (1995). https://doi.org/10.1007/BF01068076
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DOI: https://doi.org/10.1007/BF01068076