The effect of ex post risks on post-M&A performance efficiency

Dzhagityan, Eduard (2012): The effect of ex post risks on post-M&A performance efficiency.

Abstract

This article undertakes an empirical analysis of M&A-related risks based on evidence from eight listed U.S. bank holding companies over the period 2000-10. The research model is designed as an inter-domain risk matrix encompassing idiosyncratic and systematic risks underlying horizontal and conglomerate M&A. Risk impact is measured by critical performance metrics at corporate and environmental levels in the pre- and post-M&A periods. It was found insignificant relationship between synergy and concentration and marginal priority of financial over operating synergy in the post-M&A realm. While systematic risk can be mitigated by horizontal M&A followed by majority ownership, its adverse effect is insurmountable for institutions resulted from conglomerate M&A.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mergers and acquisitions (M&A); U.S. banking industry; Idiosyncratic risk; Systematic risk; Synergy; Concentration; M&A paradigm shift
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance

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