Explaining M&A Success in European Banks

Abstract

"We study 98 large M&As of European bidding banks from 1985 to 2000 in order to investigate drivers of excess returns to the shareholders of the targets, the bidders, and to the combined entity of the bidder and the target. Our findings show that many of 13 drivers identified mostly from prior, US-focused research have significant explanatory power, indicating that the stock market reaction to M&A announcements of European bidding banks can be at least partly forecast. Our results are largely consistent with the US-experience and confirm the preference of stock markets for focused transactions and against diversification. Moreover, we find that less active bidders create more value than more active/experienced bidders. This stands in contrast to some US research and may indicate that managers of frequent European bidding banks may be motivated by other objectives than creating shareholder value." Copyright Blackwell Publishers Ltd, 2004.

Short- And Long-Term Wealth Gains From UK Takeovers: The Case Of The Financial Industry

“…In addition, financial analysts expect further acquisitions, which causes higher sector index level, reducing excess returns. Lastly, Beitel et al (2004) and Campa and Hernando (2006) find no significant short-term wealth effects for acquiring banks. Andre et al, 2004) show that these firms experience negative long-term abnormal returns after takeovers.…”

Revisiting the merger and acquisition performance of European banks

“…The sample used in this study differs from those of other studies examining the European market (e.g. Cybo-Ottone and Murgia, 2000, Beitel and Schiereck, 2001, Beitel et al, 2004, Lepetit et al, 2004, Ismail and Davidson, 2005, Campa and Hernando, 2006 in that: a) it spans a longer period (1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004); b) it focuses only on banking deals within EU-15 and Eastern Europe, in contrast to other studies that utilised a sample included companies from the financial sector in general; c) it does not restrict the sample requiring both the acquiring and the target bank having their shares listed on an organised stock exchange and therefore conclusions can be reached regarding the potential different reaction of the market to deals involving banks not listed on an exchange (i.e. due to information asymmetries); and d) it utilises balance-sheet data, an approach followed only by Bietel et al (2004) and to some extend by Campa and Hernando (2006).…”

“…Campa and Hernando, 2006, Ismail and Davidson, 2005, Lepetit et al, 2004, Altunbas and Ibanez, 2004, Beitel et al, 2004, Beitel and Schiereck, 2001, Cybo-Ottone and Murgia, 2000. 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Thomson Financial Securities Data Company.…”

The impact of perceived risk on the capital market’s reaction to outsourcing announcements

“…The event study methodology applied in this paper relies on the market model based approach suggested by (Fama, et al 1969), perpetuated by (Brown and Warner 1980;Brown and Warner 1985;Cable and Holland 1999;MacKinlay 1997) and used by (Beitel, et al 2004). Generally, event studies measure the capital market reaction (abnormal returns) of a certain stock after company-specific news has been issued towards investors.…”