Beltratti, Andrea and Paladino, Giovanna (2011): Is M&A different during a crisis? Evidence from the European banking sector.
Download (117Kb) | Preview
The financial crisis has affected the landscape of the banking sector around the world. We use a sample of transactions taking place in Europe in 2007-2010 to study the acquirer’s stock price market reaction to announcements and completions of acquisitions. We find that there are no significant abnormal returns around the announcement of an acquisition while there are positive abnormal returns at completions. We study the cross-sectional determinants of abnormal returns and find that announcement returns are mainly explained by the acquirer bank characteristics, while completion returns depend on opacity of the target and in large part on the drop in volatility associated with a reduction of uncertainty.
|Item Type:||MPRA Paper|
|Original Title:||Is M&A different during a crisis? Evidence from the European banking sector|
|Keywords:||Mergers and Acquisitions; Banks; Opacity; Financial crisis|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Giovanna Paladino|
|Date Deposited:||28. Nov 2011 19:45|
|Last Modified:||11. Feb 2013 18:54|
Acharya, Viral V., Hyun Song Shin, and Tanju Yorulmazer, 2011, Crisis resolution and bank liquidity, Review of Financial Studies, 24, 2166-2205.
Amihud, Yakov, Baruch Lev and Nickolaos G. Travlos, 1990, Corporate Control and the Choice of Investment Financing: The Case of Corporate Acquisitions, The Journal of Finance 45, 603-616.
Ang, Andrew, Robert J. Hodrick, Y. Xing, and X. Zhang, 2006, The cross-section of volatility and expected stock returns, Journal of Finance, 61, 259-299.
Beitel, Patrick, Dirk Schiereck and Mark Wahrenburg, 2004, Explaining M&A success in European banks, European Financial Management 10, 109-139.
Beltratti, Andrea, and René M. Stulz, 2011, The credit crisis around the globe: Why did some banks perform better?, Journal of Financial Economics, forthcoming.
Berger, Allen, and Christa Bouwman, 2009, Bank Liquidity Creation, The Review of Financial Studies 22, 3779-3837.
Branch, Ben, and Yang Taewon, 2003, Predicting successful takeovers and risk arbitrage, Quarterly Journal of Business and Economics Winter/Spring , 3-18.
Cai, Jie, Moon H. Song, and Ralph A. Walkling, 2011, Anticipation, acquisitions, and bidder returns: Industry shocks and the transfer of information across rivals, Review of Financial Studies, 24, 2242-2285.
Caiazza Stefano and Alerto F. Pozzolo, 2011, Le determinanti dell’abbandono nelle operazioni di fusione e acquisizione nel settore bancario, XVI Rapporto Fondazione Rosselli, Edibank, 315-331.
Campa, José Manuel, and Ignacio Hernando, 2006, M&A Performance in the European Financial Industry, Journal of Banking and Finance 30, 3367-3392.
Chen, Sheng-Syan, Robin K. Chou, and Yun-Chi Lee, 2011, Bidders’ strategic timing of acquisition announcements and the effects of payment method on target returns and competing bids, Journal of Banking and Finance, 35, 2341-2354.
DeYoung, Robert, Douglas D. Evanoff, and Philip Molyneux, 2009, Mergers and acquisitions of financial institutions: E review of the post-2000 literature, Journal of Financial Services Research, 36, 87-110.
Demirgüç-Kunt, Asli and Harry Huizinga, 2010, Are Banks Too Big to Fail or Too Big to Save? International Evidence from Equity Prices and CDS Spreads, Policy Research Working Paper, 5360, The World Bank.
Diamond, Douglas W., and Raghuram Rajan, 2009, The Credit Crisis: Conjectures about Causes and Remedies, American Economic Review,99, 606–10.
Doidge, Craig. G.Andrew Karolyi, and René Stulz, 2007, Why Do Countries Matter So Much for Corporate Governance?, Journal of Financial Economics 86, 1-39.
Emmons, William, Alton Gilbert, and Timothy Yeager, 2004, Reducing the Risk at Small Community Banks: Is It Size or Geographic Diversification That Matters?, Journal of Financial Services Research 25, 259-281.
Ellis, Jesse, Sara Moeller, Frederik Schlingemann and René Stulz, 2011, Globalization, Governance and the Return of Cross Border Acquisitions, Dice Center WP 2011-1. Faccio, Mara and Ronald W. Masulis, 2005, The Choice of Payment Method in European Mergers and Acquisitions, Journal of Finance, 60,1345-1388
Fishman, Michael J., 1989, Preemptive Bidding and the Role of the Medium of Exchange in Acquisitions. Journal of Finance 44, 41-57.
Flannery, Mark J., Simon H. Kwan and Mahendrarajah Nimalendran, 2010, The 2007-09 Financial Crisis and Bank Opaqueness, Federal Reserve Bank of San Francisco, Working Paper Series 2010-27
Gorton Gary B., 2010, Questions and Answers about the Financial Crisis, NBER Working Paper Series, Working Paper 15787.
Group of Thirty, 2009, Financial Reform: A Framework for Financial Stability Special Report: Washington DC.
Hansen, Robert G., 1987, A Theory for the Choice of Exchange Medium in Mergers and Acquisitions, Journal of Business 60, 75-95.
Hankir, Yassin, Rauch Christian and Marc P. Umber, 2011, Bank M&A: A Market Power Story?, Journal of Banking and Finance, 35, pp. 2341-2354.
Hughes, Joseph P., William W. Lang, and Loretta J. Mester, 1999, The dollars and sense of bank consolidation, Journal of Banking and Finance 23, 291-324.
James, Christopher M. and Peggy Wier, 1987, Returns to Acquirers and Competition in the Acquisition Market: the Case of Banking, The Journal of Political Economy 95, 355-370.
Jones, Jeffrey, Wayne Y. Lee and Timothy Yeager, 2011 Opaque Banks, Price Discovery, and Financial Instability, Working Paper (May 11, 2011). Available at SSRN: http://ssrn.com/abstract=1458575
Karceski, Jason, Steven Ongena and David C. Smith, 2005, The Impact of Bank Consolidation on Commercial Borrower Welfare, Journal of Finance 60, 2043-2082.
Koetter, Michael, Jaap W.B. Bos, Frank Heid , James W. Kolari , Clemens J.M. Kool and Daniel Porath, 2007, Accounting for Distress in Bank Mergers, Journal of Banking and Finance 31, 3200-3217.
La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny, 1998, Law and finance, Journal of Political Economy 106, 1113-1155.
Lorenz, Johannes-T. and Dirk Schiereck, 2007 Completed versus cancelled banking M&A transactions in Europe, Working Paper.
Mitchell, Mark, Todd Pulvino and Erik Stafford, 2004, Price pressure around mergers, Journal of Finance, 59, 31-63.
Moeller, T., 2005, Let’s make a deal! How shareholder control impacts merger payoffs, Journal of Financial Economics, 76, 167-190.
Moeller, Scott and Anna Faelton, 2009, The Good, the Bad and the Ugly: A Guide to M&A in distressed times Cass Business School, M&A Research Centre.
Moeller, Sara B., Frederik P. Schlingemann, and René M. Stulz, 2007, How do diversity of opinion and information asymmetry affect acquirer returns? Review of Financial Studies, 20, 2047-2078.
Myers, Stewart and Nicholal S. Majluf, 1984, Corporate financing and investment decisions when firms have information that investors do not have, Journal of Financial Economics 13, 187-221.
Netter, Jeffry, Mike Stegemoller and M. babajide Wintoki, 2011, Implications of data screens on merger and acquisition analysis: A large sample study of mergers and acquisitions from 1992 to 2009, Review of Financial Studies, 24, 2200-2243.
Peterson, David R., and Adam R. Smedema, 2011, The return impact of realized and expected idiosyncratic volatility, Journal of Banking and Finance, 35, 2547-2558.
Shleifer, Andrew, and Robert W. Vishny, 1997, The limits of arbitrage, Journal of Finance, 52, 35-55.
Spyrou, Spyros and Georgia Siougle, 2010, Stock price reaction to M&A announcements: Evidence from the London Stock Exchange, Journal of Money, Investment and Banking 16, 29-45.
Vallascas, Francesco, and Jens Hegendorff, 2011, The Impact of European Bank Mergers on Bidder Default Risk, Journal of Banking and Finance 35, 902-915.
van Lelyveld, Iman and Klaas Knot, 2009, Do Financial Conglomerates Create or Destroy Value? Evidence for the EU, Journal of Banking and Finance 33, 2312-2321.