Research authored by the assistant professor of finance examines the effects of using investor relation firms during merger and acquisition activity.
Kate Upton, assistant professor of finance in the Martha and Love School of Business, authored the paper “Investor Relations Role in Merger and Acquisition Activity,” which was published in Quarterly Journal of Finance.
Upton documented the effects of firms utilizing investor relation firms to communicate with clients during takeover contests. Her research indicates when target firms use an investor relation firm, they receive higher deal premiums and their deals take longer to complete, implying enhanced bargaining power. When bidder firms employ investor relation firms, their deals are more likely to be completed.
The paper was presented at the Midwest Finance Association conference.
The paper’s abstract reads:
“Managers are increasingly likely to use investor relations (IR) specialists to communicate to their investors during takeover contests. This paper is the first to study the use of external IR firms and their relation to merger and acquisition (M&A) deal characteristics. Targets that employ IR exhibit increased deal premiums, increases in the time to resolution, and a lower likelihood of deal completion, which may be associated with an IR firm’s media campaign and efforts to delay or prevent a deal. Bidders who utilize IR resources have deals that are more likely to be completed, which likely reflects their ability to educate investors.”
Upton joined Elon in 2014 after earning her doctorate in finance from the University of Alabama. Her research interests include corporate finance-capital structure with a focus on debt deterogeneity, and investments, specifically hedge funds, mutual funds and corporate bonds. Her scholarship has been published in Managerial Finance and the Journal of Investing.