The Role of Financial Advisor Industry Expertise in M&A Quality : Evidence from Goodwill Impairment

Using a sample of publicly-listed Chinese firms during the period 2009 to 2017, we investigate the impact of financial advisors' industry expertise on the quality of mergers and acquisitions (M&A) in terms of goodwill impairment. Consistent with information transmission hypothesis, we find that acquirers who engage financial advisors with industry expertise exhibit significantly less inflated goodwill, fewer impairments, and enhanced long-term operational performance, particularly in cross-region and unrelated M&A transactions where information asymmetry is more severe. Our findings corroborate the regulator's directive to augment the proficiency of financial advisors in M&A markets