6 Conclusion
This study explores the role of financial advisors on deal outcomes for bidding firms in the Asia Pacific market from 1995 to 2011. Using a comprehensive sample of 5271 bidders with the standard event study methodology, the results reveal that the quality of financial advisors appears to have an influence on bidder completion time. The findings indicate that bidders take longer time to complete the deals when hiring tier-3 advisors. Interestingly, the results show that bidders obtain gains surrounding the announcement date, but suffer losses during the post-announcement period. Bidders with the use of financial advisors obtain higher returns than those without using financial advisors. More importantly, the results indicate that bidders advised by tier-3 advisors consistently obtain higher returns both around the announcement date and during the post-announcement period. In the regression analysis, the results show that bidders obtain higher announcement returns surrounding the announcement date when hiring tier-2 and tier-3 advisors. The empirical findings are robust when additionally controlling for year effects, country effects, and inverse mill’s ratios. This solid evidence is hold when analyzing domestic deals only. When analyzing cross border deals, the evidence reveals that bidders advised by tier-2 advisors obtain higher announcement returns. Looking at 270-day (?1,?270) post-announcement period, the results interestingly show that bidders in domestic deals obtain lower returns when hiring tier-1 advisors.
