INVESTMENT BANKS IN DUAL ROLES: ACQUIRER M&A ADVISORS AS UNDERWRITERS

We analyze the dual role of investment banks that provide advice to acquiring firms and act as underwriters on the securities issued to finance the acquisition. We find that the dual role of acquirer advisors is associated with lower acquirer announcement returns, higher target announcement returns, higher acquisition premiums, faster completion speeds, and higher divestiture rates. The dual role of the acquirer advisor does not lead to lower underwriting fees or issue costs. Our results are robust to controlling for the endogeneity of selection of the acquirer advisor as underwriter on the security issue used to finance the acquisition.