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Federal Reserve Bank of Chicago
Emerging Issues
The role of financial advisors in merger and acquisitions
Linda Allen
Julapa Jagtiani
Anthony Saunders
Abstract

This paper looks at the role of commercial banks and investment banks as financial advisors. Unlike some areas of investment banking, commercial banks have been allowed to compete directly with traditional investments banks in this area. In their role as lenders and advisors, banks can be reviewed as serving a certification function. However, banks as lenders and advisors also have a potential conflict of interest that may mitigate their certification function. Overall, it is found that the certification effect dominates the conflict of interest effect and that the certification effect is particularly strong when the target's own bank advises either the target or the acquirer.


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Linda Allen & Julapa Jagtiani & Anthony Saunders, "The role of financial advisors in merger and acquisitions" , Federal Reserve Bank of Chicago, Emerging Issues, issue Feb, 2000.
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Keywords: Consolidation and merger of corporations ; Investment banking ; Bank investments ; Bank management
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