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Is It the Investment Bank or the Investment Banker? A Study of the Role of Investment Banker Human Capital in Acquisitions

Published online by Cambridge University Press:  07 September 2018

Thomas J. Chemmanur ,
Mine Ertugrul  and
Karthik Krishnan
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Abstract

Using a novel data set that links individual investment bankers to the acquisition deals they advise on, we find that individual investment bankers with greater deal experience are associated with higher acquisition returns and post-acquisition operating performance, particularly for acquirers in complex and more opaque industries. The advisory fee on acquisitions is also positively associated with the investment banking team’s experience. Finally, when more experienced investment bankers switch to a new bank, acquirers are more likely to move with them. Overall, our results suggest that the human capital of individual investment bankers is valuable to acquirers.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 54 , Issue 2 , April 2019 , pp. 587 - 627
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2018 

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Footnotes

1

We are grateful to Hendrik Bessembinder (the editor) and Bill Wilhelm (the referee) for excellent comments and suggestions that have helped to significantly improve the article. We thank seminar participants at the Financial Intermediation Research Society (FIRS) annual meetings, American Finance Association (AFA) annual meetings, Boston College, Northeastern University, and the University of Connecticut. We also thank Mergermarket Ltd. for making data on individual investment bankers available to us. We thank Robert Ferriter and Bao Vien Phan for excellent research support. Any errors and omissions are the responsibility of the authors. Chemmanur acknowledges summer research support from Boston College and additional support from a Hillenbrand Distinguished Fellowship.

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