The stock market reaction to cross-border acquisitions of financial services firms: an analysis of Canadian banks

Bessler, Wolfgang; Murtagh, James P.

doi:10.1016/s1042-4431(02)00022-7

Cited by 29 publications

(17 citation statements)

References 19 publications

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“…The results are in line with the argument that acquiring banks overpay for targets, which leads to a value destruction strategy. The studies of Becher (2000) and Bessler and Murtagh (2002), among others, confirm these results. They consistently show that US bank mergers do not create value, irrespective of whether they are focused or diversified.…”

Section: Literature Reviewsupporting

confidence: 59%

“…Several studies that focus on the short-term wealth effects of takeovers in the financial sector report negative short-term performance for the bidders (Becher, 2000;Amihud et al, 2002;Bessler & Murtagh, 2002;Williams & Liao, 2008). They reject the synergetic hypothesis and support the argument that managers overestimate expected synergies of corporate acquisition (i.e., the managerial hubris hypothesis).…”

Section: Literature Reviewmentioning

confidence: 96%

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

Boubaker

Hamza

2014

JABR

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Section: Literature Reviewsupporting

confidence: 59%

Section: Literature Reviewmentioning

confidence: 96%

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

Boubaker

Hamza

2014

JABR

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“…The null hypothesis presumes the event should have no impact on the mean or on the variance of the two involved parties stock. We use the standardized cumulative abnormal return (SCAR) (Bessler and Murtagh, 2002;Nnadi and Tanna, 2013).…”

Section: Methodsmentioning

confidence: 99%

Do domestic banks Mergers and Acquisitions Still Create Value? Recent Evidence from Europe

Kyriazopoulos¹,

Drymbetas²

2015

JFBM

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We study the M&A phenomenon in Europe during an extensive period spanning 1996-2010 using a sample of 118 domestic bank Ms&As. We compare the short-term impact of acquirer and target share prices around the announcement period and find significant abnormal returns for target banks for the 3-day event window. We argue that prior profitability can explain short-term price effects for both acquirers and targets since ROA affects positively cumulative abnormal returns when employing cross-sectional regression analysis. Accordingly, bidder banks, displaying prior low return on equity, experience losses in the post-event 10-day period, while target banks losses expand throughout our 21-day event window, underlying the important role of ROE on the formation of investment decisions and overall market perception. Investors favour both acquirers and sellers with high prior profitability.JEL: G11; G14, G15; G34

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“…The event-study methodology was originally developed for studying financial businesses (MacKinlay, 1997, Campbell et al, 1997, and is often used to evaluate market responses. Rad and Van Beek (1999) and Bessler and Murtagh (2002) are example researchers who applied this methodology. However, very few studies in the telecommunications industry have been done using such quantitative evaluations; the research by Wilcox et al (2001) being one of the few cases where event-study methodology has been applied to this industry.…”

Section: Data and Procedures For Evaluationmentioning

confidence: 99%

Valuation of Inter-firm Relationships in the Telecommunications Industry: Typology and Market Responses

Shiraishi

Iijima

2010

CMR

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This paper discusses a typology and evaluations of inter-firm relationships in the telecommunications industry. The authors define inter-firm relationships as a broad range of relationships including strategic alliances, joint ventures, and mergers and acquisitions (M&A) or other equity-based relationships. Forming relationships and selecting partners are the two most important issues for managers when arranging inter-firm relationships and these are also important subjects for research in this area. The authors empirically analyzed inter-firm relationships by evaluating short-term stock-market responses to announcements about the formation of such relationships. These evaluations follow typologies previously proposed by the authors, which are explained in this paper. Three hypotheses are proposed and examined regarding general market responses and the difference in responses between each defined type of relationship and market.The results from evaluations revealed that market responses were generally not favorable in the short term in contrast to general understanding of market responses. However, the authors found significant differences in responses between the relationship categories of the framework. Practical implementations were obtained where managers in the industry had to take into account how the stock market responded to the formation of inter-firm relationships when they developed their corporate strategies. The results also demonstrated the validity of the proposed framework and suggested it should be useful to enable further analysis of this industry. Yoshino and Rangan (1995). Inter-firm relationships in the industry had become common by the mid-1980s in the United States and other industrialized countries soon joined this trend as deregulation advanced in the 1990s (Joshi et al., 1998, Trillas, 2002. Managers in the telecommunications industry should therefore consider the development of inter-firm relationships as their most important strategic activities, and a present matter of importance to them is evaluating inter-firm relationships. Managers engaged in developing inter-firm relationship strategies must decide whether to form inter-firm relationships, and which firms to target as potential partners. Such decisions must offer them the opportunity of improving the firm's competitive scope, increasing profitability, or gaining positive acceptance by stakeholders. Therefore, effective ways of evaluating inter-firm relationships are key tools for such managers and such tools would also be valuable to enable academic studies of these relationships.Although research has been conducted on inter-firm relationships in the telecommunications industry (e.g. Graack, 1996, Oh, 1996, Baroncelli, 1998, ChanOlmsted and Jamison, 2001, Curwen, 2001, Faulhaber, 2002, Jamison and ChanOlmsted, 2002, this has mainly focused on explaining specific relationships and discussion has mostly focused on rather qualitative standpoints. In this research, the authors have attempted to conduct quantitative evaluati...

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The stock market reaction to cross-border acquisitions of financial services firms: an analysis of Canadian banks

Cited by 29 publications

References 19 publications

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

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

Do domestic banks Mergers and Acquisitions Still Create Value? Recent Evidence from Europe

Valuation of Inter-firm Relationships in the Telecommunications Industry: Typology and Market Responses

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