REVISITING THE MERGER AND ACQUISITION PERFORMANCE OF EUROPEAN BANKS
Bank of Greece
Panayiotis P. Athanasoglou
Bank of Greece
The study examines the value creation of Merger and Acquisition (M&A) deals in European Banking from 1990-2004. 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 are 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
: Bank mergers, mergers and acquisitions, abnormal returns: G14, G21, G34
JEL classification: G14, G21, G34
Acknowledgements: The authors would like to thank H. Gibson for very helpful comments. The views expressed in this paper do not necessarily reflect those of the Bank of Greece.
: The authors would like to thank H. Gibson for very helpful comments. The views expressed in this paper do not necessarily reflect those of the Bank of Greece.
Ioannis Asimakopoulos Panayiotis Athanasoglou,
Economic Research Department Economic Research Department\
Bank of Greece, Bank of Greece,
21, E. Venizelos Ave., 21, E. Venizelos Ave.,
102 50 Athens, Greece, 102 50 Athens, Greece,
Tel. +30210-3203618 Tel. +30210-3202449
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