'The Role of Public Relations Advisors in Acquisitions'

About Henri Servaes (London Business School)

Title: The Role of Public Relations Advisors in Acquisitions

Abstract:

Bidders that employ top-tier public relations (PR) advisors have merger announcement returns that are 0.78% higher than other firms. The effect is driven by acquisitions of private companies, where returns are 1.33% higher. These are deals for which information about the target is sparser and communication more important. The effect is larger for smaller bidders and bidders with less analyst following. Propensity score matching and IV regressions support a causal interpretation. Our findings suggest that PR advisors can enhance deal quality due to their ability to communicate effectively with stakeholders, thus increasing the likelihood that proposed merger benefits are realized 

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