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Citation link: https://media.suub.uni-bremen.de/handle/elib/5285

Publisher DOI: https://doi.org/10.1108/JRF-05-2016-0069
 
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Announced versus canceled bank mergers and acquisitions: Evidence from the European banking industry


Other Titles: Angekündigte versus abgesagte Fusionen und Übernahmen von Banken: Erkenntnisse aus dem europäischen Bankensektor
Authors: Varmaz, Armin  
Laibner, Jonas 
Abstract: 
Purpose – This paper aims to empirically analyze the success of European bank mergers and acquisitions (M&As) by an analysis of the shareholder value implications of stock market reactions to announced and canceled M&As in the period from 1999 to 2015.
Design/methodology/approach – The analysis of a sample of 467 announced and 54 canceled European bank M&As is conducted using event study methodology. The determinants of the shareholder value creations in M&A are observed in cross-sectional regressions. The likelihood of M&As being canceled is estimated in logit regressions.
Findings – The paper finds that European bank M&As have not been successful in terms of shareholder value creation for acquiring banks, whereas targets experienced significant value gains. Abnormal returns for bidders and targets exhibit the same characteristics upon the announcement of M&As that are canceled at a later date, whereas the results for transaction cancelations deviate. Targets experience negative abnormal returns at a larger size than upon the transaction announcement. The
findings for bidders are striking, as they destroy shareholder value upon the transaction cancelation, also, consequently they suffer twice. In particular, banks with higher profitability, higher efficiency and lower liquidity experience negative abnormal returns around the announcement dates. Negative abnormal returns prior to the transaction announcement and provision for loan losses increase significantly the likelihood of M&A cancelation.
Originality/value – This paper contributes to the literature expanding existing analyses to the shareholder value implications of canceled European bank M&As in a 17-year long time period. The findings reveal the destructive characteristics of canceled bank M&As and provide innovative insights into European capital market reaction to canceled M&As.
Keywords: Shareholder value; Event study; Bank Merger and Acquisitions determinants of Merger and Acquisitions success; Probability of Merger and Acquisitions cancelation
Issue Date: 17-Sep-2016
Journal/Edited collection: The Journal of Risk Finance 
Start page: 510
End page: 544
Note: 5
Band: 17
Type: Artikel/Aufsatz
ISSN: 1526-5943
Institution: Hochschule Bremen 
Faculty: Hochschule Bremen - Fakultät 1: Wirtschaftswissenschaften - School of International Business (SiB) 
Appears in Collections:Bibliographie HS Bremen

  

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