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Title:It's the market power, stupid! Stock return patterns in international bank M&A PDF Logo
Authors:Hankir, Yassin
Rauch, Christian
Umber, Marc P.
Issue Date:2009
Series/Report no.:Working paper series // Frankfurt School of Finance & Management 129
Abstract: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.
Subjects:M&A
Banks
Event Study
Peer Returns
Market Power
JEL:G34
G21
G14
L13
Persistent Identifier of the first edition:urn:nbn:de:101:1-2009102604
Document Type:Working Paper
Appears in Collections:Frankfurt School - Working Paper Series, Frankfurt School of Finance and Management

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