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Incentives for Banking Megamergers: What Motives Might Regulators Infer from Event-Study Evidence?

Edward Kane ()

Journal of Money, Credit and Banking, 2000, vol. 32, issue 3, 671-701

Abstract: Methodologically, this paper frames the opportunity cost of any merger as the value of the alternative deals it precludes or defers. This challenges the standard event-study hypothesis that stock markets benchmark the value of a merger deal by the profits the partners would have earned in stand-alone activity. Substantively, the paper finds that megamergers in banking show two size-related exceptions to the prototypical result that acquirer stock value tends to be unaffected or to fall when a merger is announced. Giant U.S. banking organizations gain value from becoming more gigantic and gain additional value when they absorb an in-state competitor.

Date: 2000
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Related works:
Journal Article: Incentives for banking megamergers: what motives might regulators infer from event-study evidence? (2000)
Working Paper: Incentives for banking megamergers: what motives might regulations infer from event-study evidence? (2000)
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