Law Firm Expertise and Shareholder Wealth.
DOI
10.1111/fmii.12152
Abstract
This paper examines the impact of law firm expertise on bidder and target shareholder wealth gains during mergers and acquisitions. After controlling for endogeneity in the matching between the mandating firm (bidder or target firm) and the law firm, we find that top-tier law firms increase the wealth of bidder shareholders by an average of 2.00% ($30.80 million) to 3.07% ($47.28 million). This does not hold for target firm shareholders. Interestingly, we find no evidence that the reputation of the investment bank is related to bidder or target shareholder wealth gains. Our findings suggest that top-tier lawyers are effective “transaction cost engineers.” They create value for their clients by structuring deals to minimize transaction and regulatory costs.
Document Type
Restricted Article: Campus only access
Publication Date
9-13-2021
Publisher Statement
Copyright © New York University Salomon Center.
DOI: https://doi.org/10.1111/fmii.12152
The definitive version is available at: https://onlinelibrary.wiley.com/doi/epdf/10.1111/fmii.12152
Recommended Citation
Schweizer, Denis, and Ge Wu. “Law Firm Expertise and Shareholder Wealth.” Financial Markets, Institutions & Instruments 30, no. 4 (2021): 129–63. https://doi.org/10.1111/fmii.12152.