The Dark Role of Investment Banks in the Market for Corporate Control Export

@article{citeulike:2315180, abstract = {We study the "dark" role of advisory banks in the market for corporate control. We argue that advisors are privy to information about the deal that they may directly exploit by investing in the target firm. We show that the advisors to the bidders often have positions in the target before the deal announcement and that profit from such a position. A trading strategy conditional on the advisor's stake delivers a net-of-risk performance of 4.08\% per month. This cannot be replicated using publicly available information. Advisors not only take positions in the deals on which they advise, but also directly affect the outcome of the deals, negotiating conditions that increase the probability of success. This has negative implications for the viability of the new entities.}, author = {Bodnaruk, Andriy and Massa, Massimo and Simonov, Andrei}, citeulike-article-id = {2315180}, citeulike-linkout-0 = {http://ssrn.com/abstract=966202}, citeulike-linkout-1 = {http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1079348_code183015.pdf?abstractid=966202&mirid=1}, journal = {Social Science Research Network Working Paper Series}, keywords = {chinese, insider, trading, wall}, month = {December}, posted-at = {2008-01-31 15:03:29}, priority = {2}, title = {The Dark Role of Investment Banks in the Market for Corporate Control}, url = {http://ssrn.com/abstract=966202}, year = {2007} }

TY - JOUR ID - citeulike:2315180 L3 - citeulike-article-id:2315180 N2 - We study the "dark" role of advisory banks in the market for corporate control. We argue that advisors are privy to information about the deal that they may directly exploit by investing in the target firm. We show that the advisors to the bidders often have positions in the target before the deal announcement and that profit from such a position. A trading strategy conditional on the advisor's stake delivers a net-of-risk performance of 4.08% per month. This cannot be replicated using publicly available information. Advisors not only take positions in the deals on which they advise, but also directly affect the outcome of the deals, negotiating conditions that increase the probability of success. This has negative implications for the viability of the new entities. JF - Social Science Research Network Working Paper Series TI - The Dark Role of Investment Banks in the Market for Corporate Control KW - chinese KW - insider KW - trading KW - wall AU - Bodnaruk, Andriy AU - Massa, Massimo AU - Simonov, Andrei PY - 2007/December// UR - http://ssrn.com/abstract=966202 ER -