Financial Advisor Reputation and Value Creation in M&As - Evidence from the Scandinavian Market

Abstract: In contrast to previous studies, we show a significant positive effect of financial advisor reputation on cumulative abnormal returns. In M&As completed in Scandinavia between 2000 and 2015, top-tier advisors create 1.32% higher abnormal returns to the acquiring firms’ shareholders. Top-tier advisors are also associated with longer time to completion, indicating that they are more thorough in the acquisition process to ensure value creation. The results remain significant after controlling for acquirer and deal characteristic shown to influence acquirer returns.