Wu, Cen and Tang, Qingquan and Tang, Jiali Jenna (2017) Do financial advisors live up to their reputation: the case of major assets restructurings of Chinese listed companies. In: 17th Annual Conference of the Asian Academic Accounting Association (2016 FourA Conference), 20-22 November 2016, Kuching, Sarawak.

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Abstract

We investigate whether top-tier advisors provide superior services by examining the relationship between reputation (measured by whether it is a top-10 advisor ranked on deal value) of financial advisors on the bidder side and stock market-based/accounting-based performance of bidders. Using Chinese listed companies with major assets reorganizations (MARs, M&As with large-scale target), we find top-tier advisors are associated with higher excess returns (CARs), implying that reputation generates a verification effect on investors.But we find no significant relationship between the advisor reputation and bidders’ accounting-based performance post-MARs. The findings indicate that although advisor reputation can attract M&A business and sends positive signal to the market, it does not lead to stronger financial performance in the long run. That is, the so-called top-tier financial advisors fail to live up to their reputation.We also find that payment premium is an intervening variable between advisor reputation and the long-term accounting-based performance of bidders, suggesting that top-tier advisors fail in their duties to help clients achieve greater share of synergy gains.

Item Type:	Conference or Workshop Item (Paper)
Additional Information:	Published in SHS Web of Conferences 34,03001 (2017) Organized by: Institute for Strategic and Sustainable Accounting Development (ISSAD), Tunku Puteri Intan Safinaz School of Accountancy (TISSA), Universiti Utara Malaysia (UUM)
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting
Divisions:	Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
Depositing User:	Mrs. Norazmilah Yaakub
Date Deposited:	22 Feb 2017 08:48
Last Modified:	22 Feb 2017 08:48
URI:	https://repo.uum.edu.my/id/eprint/20999

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