It's the market power, stupid! Stock return patterns in international bank M&A

Arbeitspapier

This paper analyzes capital market reactions to international bank M&A. We investigate combined stock return patterns of targets, bidders, and their peers upon takeover announcement, and closing or withdrawal. We distinguish five common M&A hypotheses and relate characteristic and mutually exclusive abnormal stock return patterns to each hypothesis. We find that investors believe in gains through the exploitation of market power by the post-merger entity. In a multinomial logistic model we show that patterns related to market power significantly concur with large relative target size, intra-industry mergers, and increasing market concentration, suggesting a substantial lessening of competition through M&A.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Frankfurt School - Working Paper Series ; No. 129

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Information and Market Efficiency; Event Studies; Insider Trading ; Oligopoly and Other Imperfect Markets
• Subject: M&A ; Banks ; Event Study ; Peer Returns ; Market Power

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hankir, Yassin ; Rauch, Christian ; Umber, Marc P.
• Event: Veröffentlichung
• (who): Frankfurt School of Finance & Management
• (where): Frankfurt a. M.
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30170
• URN: urn:nbn:de:101:1-2009102604
• Last update: 10.03.2025, 11:43 AM CET