Do M&amp;As Generate Value for Shareholders? An Analysis of the Italian Banking Sector

Intrisano, Carmelo; Rossi, Fabrizio

doi:10.2139/ssrn.2419853

“…The results obtained in this study confirm those found by Intrisano and Rossi (2012) for the short term in the banking sector.…”

Section: Discussionsupporting

confidence: 91%

“…In the short term, the results are different depending on the sample examined. For the banking sector, the values obtained are in line with Becher (2000), Ferretti (2000), DeLong (2001), Houston, James, and Ryngaert (2001), Intrisano and Rossi (2012).…”

Section: Resultssupporting

confidence: 79%

The Post-Merger Performance: Evidence From Italy

2012

CBR

0

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The objective of this paper is to investigate whether mergers create value for shareholders in both the short and long term. For this purpose, 120 announcements of mergers that were registered in Italy during the period 1994-2006 among listed companies were examined. The short-term analysis was conducted using the event study methodology in order to estimate the cumulative abnormal returns (CARs) in the time window around the announcement date (-10, +10). In this work, the sample of 120 mergers was divided into two sub-samples: the first considers the mergers that were carried out in all sectors of the economy, and the second focuses only on bank mergers. From the results obtained it would appear that, while the sub-sample of all mergers registered a statistically significant value creation for the shareholders of both the bidder and target companies, values also confirmed by combined analysis, the second sub-sample registered negative values for bidder companies and positive values for target companies. Negative values also seem to be confirmed by the results of the combined analysis both at the date of announcement and throughout the entire period of observation. For the long-term analysis, the Buy and Hold Abnormal Returns (BHARs) methodology was used, with which it was possible to observe the returns for three years. In the 36 months following the merger, the portfolios showed a significant destruction of value.

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“…In the short term, the results are different depending on the sample examined. For the banking sector, the values obtained are in line with Becher 2000, Ferretti (2000), DeLong (2001), Houston, James, and Ryngaert (2001), Intrisano and Rossi (2012). Instead, with regard to the total sample, the results show a significant value creation for the shareholders of both the bidder and target companies, also confirmed by the combined analysis.…”

Section: Tablesupporting

confidence: 72%

“…The acquired company showed an increase in profitability which, according to the authors, is related to the improvement of the quality of the loan portfolio. Intrisano and Rossi (2012) examined a sample of 72 M&As in the banking sector during the period [1994][1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005] and found values in line with literature: the bidders registered negative and statistically significant abnormal returns and the targets positive and highly significant values. The results of the combined analysis point to a statistically significant value destruction.…”

Section: Introductionmentioning

confidence: 78%

‘Four-Closure’: How Amazon, Apple, Facebook & Google are driving business model innovation

Walton

¹

2012

2012 International Conference on Innovation Management and Technology Research

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The objective of this paper is to investigate whether mergers create value for shareholders in both the short and long term. For this purpose, 120 announcements of mergers that were registered in Italy during the period 1994-2006 among listed companies were examined. The short-term analysis was conducted using the event study methodology in order to estimate the cumulative abnormal returns (CARs) in the time window around the announcement date (-10, +10). In this work, the sample of 120 mergers was divided into two sub-samples: the first considers the mergers that were carried out in all sectors of the economy, and the second focuses only on bank mergers. From the results obtained it would appear that, while the sub-sample of all mergers registered a statistically significant value creation for the shareholders of both the bidder and target companies, values also confirmed by combined analysis, the second sub-sample registered negative values for bidder companies and positive values for target companies. Negative values also seem to be confirmed by the results of the combined analysis both at the date of announcement and throughout the entire period of observation. For the long-term analysis, the Buy and Hold Abnormal Returns (BHARs) methodology was used, with which it was possible to observe the returns for three years. In the 36 months following the merger, the portfolios showed a significant destruction of value.

show abstract

“…Within the twenty days around the announcement date, in fact, there was a statistically significant creation of value equal to 3.05%. Rossi(2012).Instead, with regard to the total sample the results show a significant value creation for the shareholders of both the bidder and target companies, also confirmed by the combined analysis. These results are in line with the work of Asquith(1983), Eckbo(1983), Malatesta (1983), Asquith, Bruner, Mullins(1983),Loderer& Martin(1990),Kohers&Kohers(2000),Martynova&Renneboog(2006),who found positive abnormal returns for both companies.…”

Section: Resultssupporting

confidence: 56%

Creation or Destruction of Value in Mergers? An Empirical Analysis on the Italian Stock Market

Rossi

¹

2012

IJBTE

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The objective of this paper is to investigate whether mergers create value for shareholders in both the short and long term. For this purpose, 120 announcements of mergers that were registered in Italy during the period 1994-2006 among listed companies were examined. The short-term analysis was conducted using the event study methodology in order to estimate the cumulative abnormal returns (CARs) in the time window around the announcement date (-10, +10). In this work, the sample of 120 mergers was divided into two sub-samples: the first considers the mergers that were carried out in all sectors of the economy, and the second focuses only on bank mergers. From the results obtained it would appear that, while the sub-sample of all mergers registered a statistically significant value creation for the shareholders of both the bidder and target companies, values also confirmed by combined analysis, the second sub-sample registered negative values for bidder companies and positive values for target companies. Negative values also seem to be confirmed by the results of the combined analysis both at the date of announcement and throughout the entire period of observation. For the long-term analysis the Buy and Hold Abnormal Returns methodology (BHARs) was used, with which it was possible to observe the returns for three years. In the 36 months following the merger, the portfolio showed a significant destruction of value.

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Do M&As Generate Value for Shareholders? An Analysis of the Italian Banking Sector

Cited by 6 publications

References 31 publications

The Post-Merger Performance: Evidence From Italy

The Post-Merger Performance: Evidence From Italy

‘Four-Closure’: How Amazon, Apple, Facebook & Google are driving business model innovation

Creation or Destruction of Value in Mergers? An Empirical Analysis on the Italian Stock Market

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