Banker Fees and Acquisition Premia for Targets in Cash Tender: Challenges to the Popular Wisdom on Banker Conflicts
Coauthor(s): Charles Calomiris.
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Our results are broadly consistent with the predictions of a benign view of the role of
investment banks in advising acquisition targets. Fees to investment banks are correlated
with attributes of transactions and target firms in ways that make sense if banks are being
paid for processing information. The more contingent (and, therefore, risky) the fees, the
higher they tend to be, all else held constant. Variation in acquisition premia also can be
explained by fundamental deal attributes. Contrary to the jaundiced view of fairness
opinions, greater fixity of fees is not associated with higher acquisition premia, and there
is no evidence that investment banks are suborned by acquirors with whom they have had
a prior banking relationship.
Source: Journal of Empirical Legal Studies
Calomiris, Charles, and Donna Hitscherich. "Banker Fees and Acquisition Premia for Targets in Cash Tender: Challenges to the Popular Wisdom on Banker Conflicts." Journal of Empirical Legal Studies 4, no. 4 (December 2007): 909-938.