Professional influence: the effects of investment banks on clients' acquisition financing and performance

Hayward, Mathew L. A. (2003) Professional influence: the effects of investment banks on clients' acquisition financing and performance. Strategic Management Journal, 24 9: 783-801. doi:10.1002/smj.336

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Author Hayward, Mathew L. A.
Title Professional influence: the effects of investment banks on clients' acquisition financing and performance
Journal name Strategic Management Journal   Check publisher's open access policy
ISSN 1097-0266
0143-2095
Publication date 2003-09
Sub-type Article (original research)
DOI 10.1002/smj.336
Volume 24
Issue 9
Start page 783
End page 801
Total pages 19
Place of publication Chichester, Sussex ; Brisbane
Publisher John Wiley and sons
Language eng
Subject 15 Commerce, Management, Tourism and Services
Abstract This study examines the conditions in which professional firms use client engagements to get clients to subsequently hire them. The central thesis is that professional firms derive power from their specialized expertise and lead clients towards complex problems that apply the expertise. In particular, relative to cash-financed acquisitions, stock-financed acquisitions more intensively apply investment banks' expertise. Consistent with expectations, results from a sample of 404 acquisitions show that firms are more likely to hire banks on stock-financed acquisitions when they have previously used banks. Evidence also suggests that clients that hire banks on such acquisitions are prone to adverse performance from them. Overall, these results suggest that professional firms lead clients to complex solutions with problematic outcomes. Copyright © 2003 John Wiley & Sons, Ltd.
Keyword Sociology of professional firms
Aquisitions
Financing
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Unknown

 
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Citation counts: TR Web of Science Citation Count  Cited 18 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 24 times in Scopus Article | Citations
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Created: Tue, 07 Apr 2009, 11:20:55 EST by Ms Julie Schofield on behalf of Faculty of Business, Economics & Law