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Discussion Paper Details

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Title: The international diversification of banks and the value of their cross-border M&A advice

Author(s): Abe De Jong, Steven Ongena and Marieke van der Poel

Publication Date: March 2010

Keyword(s): Advisor Choice, Bank Diversification and Cross-Border Mergers and Acquisitions

Programme Area(s): Financial Economics

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.

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Bibliographic Reference

De Jong, A, Ongena, S and van der Poel, M. 2010. 'The international diversification of banks and the value of their cross-border M&A advice'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7735