The impact of policy uncertainty on shareholder wealth: Evidence from bank M&A

Nikolaos Kiosses, Stergios Leventis, Demetres Subeniotis and Ioannis Tampakoudis

Journal of Financial Stability, 2025, vol. 76, issue C

Abstract: We investigate the impact of policy uncertainty (PU) on the economic impact of bank mergers and acquisitions (M&A). Using a sample of 3142 deals announced by US banks between 1986 and 2020, we find a significant positive effect of PU on acquirer short- and long-term market value. PU also positively affects acquirer post-merger accounting performance and increases the incentives for synergy-driven bank M&A. Amid PU, acquirers avoid stock-only financed deals, delay deal completion, and pay higher bid premiums. Our results are robust to model specifications that control for different proxies of PU, endogeneity, asset pricing models, and event windows surrounding deal announcements.

Keywords: Policy uncertainty; Mergers; Acquisitions; Banks; Asset pricing; Event study (search for similar items in EconPapers)
JEL-codes: G12 G14 G21 G34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:76:y:2025:i:c:s1572308924001463

DOI: 10.1016/j.jfs.2024.101361

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