Do CRA‐Related Events Affect Shareholder Wealth? The Case of Bank Mergers

Harold A. Black, Raphael Bostic, Breck L. Robinson and Robert L. Schweitzer

The Financial Review, 2005, vol. 40, issue 4, 575-586

Abstract: This study explores how Community Reinvestment Act (CRA) protests and their resolution affect the market value of merging banks. We find, in contrast to earlier research, that CRA‐related events are not associated with significant negative market reactions for either bidder or target institutions. Rather, the market does not seem to respond strongly to CRA‐related events at all. The results appear to stem from the choice of an estimation period for establishing an institution's baseline stock‐market price dynamics that does not include abnormal security price movements induced by the merger announcement.

Date: 2005
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https://doi.org/10.1111/j.1540-6288.2005.00125.x

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Working Paper: Do CRA-related Events Affect Shareholder Wealth? The Case of Bank Mergers (2003)
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