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Revisiting the merger and acquisition performance of European banks

Ioannis Asimakopoulos () and Panayiotis Athanasoglou ()

International Review of Financial Analysis, 2013, vol. 29, issue C, 237-249

Abstract: The study examines the value creation of Merger and Acquisition (M&A) deals in European banking from 1990 to 2004. This is performed, first, by examining the stock price reaction of banks to the announcement of M&A deals and, second, by analysing the determinants of this reaction. The findings provide evidence of value creation in European banks as the shareholders of the targets have benefited from positive and (statistically) significant abnormal returns while those of the acquirers earn small negative but non-significant abnormal returns. In the case of the shareholders of the acquirers, domestic M&As and especially those between banks with shares listed on the stock market, seem to be more beneficial compared to cross-border ones or those when the target is unlisted. Shareholders of the targets earn in all cases positive abnormal returns. Finally, although the link between abnormal returns and fundamental characteristics of the banks is rather weak, it appears that the acquisition of smaller, less efficient banks generating more diversified income is more value creating, while acquisition of less efficient, liquid and characterised by higher credit risk banks is not a value creating option.

Keywords: Bank mergers; Mergers and acquisitions; Abnormal returns (search for similar items in EconPapers)
JEL-codes: G14 G21 G34 (search for similar items in EconPapers)
Date: 2013
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Related works:
Working Paper: Revisiting the Merger and Acquisition Performance of European Banks (2009) Downloads
Working Paper: Revisiting the merger and acquisition performance of European banks (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:29:y:2013:i:c:p:237-249

DOI: 10.1016/j.irfa.2012.08.010

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