Domestic and cross-border returns to bidders in acquisitions into the E.U.

Abstract

The article analyses shareholders returns of acquiring banks in the United Kingdom (U.K.) i.e., when U.K. banks acquire domestic banks and when U.K. banks acquire cross-border banks within the European Union (E.U.). The article includes 75% sample of the total population of bank to bank domestic acquisitions within the U.K. and crossborder acquisitions within the E.U. from 2006 until 2013. The article comes to the conclusion, by the means of event study methodology, that the shareholders returns of acquiring banks are negative and statistically insignificant (-2.076%) when they acquire cross-border banks. The results of U.K. banks acquiring domestic banks indicates higher and statistically significant abnormal returns of 1.628% at 5% significance level as compared to cross-border returns gained by U.K. acquiring banks. The research found an overall insignificant abnormal return of -0.448% for shareholders of the acquiring banks for the entire portfolio. It can be concluded that, on average, shareholders of the acquiring banks experience negative abnormal returns and acquisitions do create (short-term) abnormal returns for the acquiring banks' shareholders around the acquisition announcement time.

An Empirical Analysis of Financial Performance and Indicators of Acquisitions

“…However, the evidence with regard to the outcomes of acquisitions is mixed (Selçuk et al, 2016). There are studies that find positive outcomes (e.g., Golubov and Xiong, 2020;Powell and Stark, 2005), others that find negative outcomes (Chaudary and Mirza, 2017;Yeh and Hoshino, 2002), and yet others that report insignificant findings (Moeller and Schlingemann, 2005). Although the role of emerging markets in world investment flows has increased tremendously (Stiebale and Trax, 2011;Othchere and Oldford, 2018), the majority of studies about M&As are based on developed markets (e.g., Jensen-Vinstrup, Rigamonti, and Wulff, 2018;Li, Qiu, and Shen, 2018).…”

Covid-19 vaccines and investment performance: Evidence from equity funds in European Union

“…To assess the investment impact of marketing authorization, we use the event study methodology, and it helps evaluate the effect of new information on marketable assets beyond usual expectations. Examples may include gains for bidders ( Chaudary and Mirza, 2017 ), risk pricing ( Nguyen et al., 2019 ), rating changes ( He and Schiereck, 2019 ), and performance of bond issuers ( Berninger et al., 2021 ). If the introduction of vaccines has an investment impact, it should result in abnormal returns for the fund investors.…”

Untitled

“…where k i is the rank of the i-th stock, and s(k) is the standard deviation of the portfolio mean abnormal rank. Corrado (1989), and Campbell and Wasley (1996) have shown that nonparametric tests are more powerful for detecting abnormal performance. Another advantage of these tests is that they do not depend upon the normality assumption.…”