Post-acquisition performance of European cross-border bank M%As

Evangelos Drymbetas and George Kyriazopoulos

International Journal of Monetary Economics and Finance, 2014, vol. 7, issue 4, 328-346

Abstract: The banking industry has been alleged to be at the epicentre of mergers and acquisitions (M%As) for several decades. Though the short-term wealth effects of M&As have been extensively explored in the last decades, the long-term share price and operating performance is relatively under-researched. The current study attempts to investigate the post-event share price behaviour of a sample of acquiring firms involved in cross-border bank mergers. Using financial ratios, we also probe into the long-term operating performance of acquiring firms up to five years following the acquisition. The results show that acquiring firms experience a gradual positive price reversal up to two years subsequent to mergers. In addition, the financial performance seems to be improved in parallel to the market value. We conclude that cross-border bank mergers seem partially to benefit the acquiring firms in the long-term when synergistic gains from consolidation come to reality.

Keywords: cross-border mergers; bidders; targets; post-merger performance; buy-and-hold returns; post-acquisition performance; European banks; bank mergers; mergers and acquisitions; bank M%A; banking industry; long-term share prices; operating performance; share price behaviour; financial performance; bank performance; market value; consolidation. (search for similar items in EconPapers)
Date: 2014
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