Title: Post-acquisition performance of European cross-border bank M&As
Authors: Evangelos Drymbetas; George Kyriazopoulos
Department of Economics, Democritus University of Thrace, University Campus, Komotini 69100, Greece
Technological Educational Institute of Western Macedonia, Department of Accounting and Finance, Koila 50100, Kozani, Greece
Abstract: The banking industry has been alleged to be at the epicentre of mergers and acquisitions (M&As) for several decades. Though the short-term wealth effects of M&As have been extensively explored in the last decades, the long-term share price and operating performance is relatively under-researched. The current study attempts to investigate the post-event share price behaviour of a sample of acquiring firms involved in cross-border bank mergers. Using financial ratios, we also probe into the long-term operating performance of acquiring firms up to five years following the acquisition. The results show that acquiring firms experience a gradual positive price reversal up to two years subsequent to mergers. In addition, the financial performance seems to be improved in parallel to the market value. We conclude that cross-border bank mergers seem partially to benefit the acquiring firms in the long-term when synergistic gains from consolidation come to reality.
Keywords: cross-border mergers; bidders; targets; post-merger performance; buy-and-hold returns; post-acquisition performance; European banks; bank mergers; mergers and acquisitions; bank M&A; banking industry; long-term share prices; operating performance; share price behaviour; financial performance; bank performance; market value; consolidation.
Int. J. of Monetary Economics and Finance, 2014 Vol.7, No.4, pp.328 - 346
Submission date: 21 Mar 2014
Date of acceptance: 21 Oct 2014
Available online: 25 Feb 2015