Does target geographical complexity impact acquisition performance

Chkir, Imed; Dutta, Shantanu; Hassan, Boushra El Haj

doi:10.1016/j.frl.2019.05.014

Cited by 4 publications

(1 citation statement)

References 28 publications

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“…It is widely used to analyse expected performance, that is, the expected effects on a firm's future free cash flow, in M&As (e.g. Chkir, Dutta and El Haj Hassan, 2020; Dranev, Frolova and Ochirova, 2019; Hossain, Heaney and Koh, 2016). Event study methodology is based on the fundamental assumption of market efficiency (Fama, 1970), which implies that all available information is incorporated into stock prices.…”

Section: Methodsmentioning

confidence: 99%

When do M&As with Fintech Firms Benefit Traditional Banks?

Collevecchio

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Peruffo

et al. 2023

British J of Management

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In the last decade, fintech has emerged in the financial sector, introducing numerous innovations that have severely impacted traditional banks. To respond to fintech firms and meet the new needs of consumers, banks seek to align their offerings by integrating fintech knowledge through mergers and acquisitions (M&As) within an open innovation framework. However, it is still not clear when exactly M&As with fintech firms benefit banks. This paper examines the contingency factors that make M&As beneficial for acquirer banks by using a holistic approach that considers the type of firm, type of deal and the context in which M&As occur. We analysed the effect produced by acquirer sustainability, minority acquisitions and institutional distance between the fintech and the bank's country of incorporation by applying an event study methodology using cumulative abnormal returns to gauge effects on expected performance. We have shown which are the conditions that allow us to maximize the acquirer bank's expected performance. Our research advances the scientific understanding of M&A contingency factors, and more generally of open innovation, in the specific context of fintech and banks. Moreover, we provide managers and policymakers with initial advice on the effects fintech M&As have on traditional banks, showing that they can be beneficial under specific conditions.

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