Impact of bank mergers on shareholders’ wealth

Odero Naor Juma, Peter T. Wawire, Prof. John Byaruhanga, Ochieng Okaka and Odhiambo Odera
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Odero Naor Juma: Department of Business Management, Masinde Muliro University,of Science and Technology, Kenya
Peter T. Wawire: Department of Business Management, Masinde Muliro University,of Science and Technology, Kenya
Prof. John Byaruhanga: Department of Social Science and Education, Masinde Muliro,University of Science and Technology, Kenya
Ochieng Okaka: Department of Social Science and Education, Masinde Muliro,University of Science and Technology, Kenya
Odhiambo Odera: Department of Social Science and Education, Masinde Muliro,University of Science and Technology, Kenya

International Journal of Business and Social Research, 2012, vol. 2, issue 6, 162-177

Abstract: Mergers and acquisitions (M&As) perform a vital role in corporate finance in enabling firms achieve varied objectives and financial strategies. This study sought to comprehend the impacts that previous bank mergers have had on the shareholders’ wealth. The study location was in Kenya and it adopted the descriptive survey and correlation design in which the success of mergers was measured based on the objective oriented model using the annual accounts. The study computed the return on assets (ROA), return on equity (ROE) and the efficiency ratio (EFF) as indicators of shareholder value. The results of the commercial banks were analysed for a five-year period (2006-2010). The study reveals that mergers significantly influence shareholder value with banks that have undertaken mergers creating more value than those that have not. Such banks were ascertained to have posted better results than the overall sector.

Keywords: Bank mergers; acquisitions; shareholders’ wealth; Kenya (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mir:mirbus:v:2:y:2012:i:6:p:162-177

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