Post-acquisition performance of European cross-border bank M&As
by Evangelos Drymbetas; George Kyriazopoulos
International Journal of Monetary Economics and Finance (IJMEF), Vol. 7, No. 4, 2014

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.

Online publication date: Wed, 25-Feb-2015

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