Mergers and acquisitions in the U.S. banking industry: evidence from the capital markets
Presented in this book is a comprehensive empirical analysis of mergers and acquisitions in the U.S. banking industry. The purpose of the study is to examine the merger phenomenon in the banking industry by answering the following questions:- What are the incentives for banks to merge? - Has the prohibition of interstate banking prevented banks from diversifying and has it increased the rate of bank failures by restricting (geographical) diversification opportunities? - Are bank mergers wealth-creating activities and how are the gains/losses from a merger distributed between the acquiring and acquired bank shareholders? - How can the changes in shareholder wealth resulting from bank mergers be explained and are there differences between interstate and intrastate mergers? - What are the implications of the study's findings for regulatory policy? Theory and practical implications are blended in this book which should appeal to both academics and practitioners in the field.
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OVERVIEW AND REVIEW
The marketpower hypothesis
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11-week period surrounding abnormal returns associated acquisition proposal aggregate wealth approval Arizona Asterisks indicate significance average abnormal returns bank failures bank mergers bank stock prices bank's beta coefficient bidding banks cash offers Chapter correlation coefficients cross-sectional regression Cumulative average abnormal denial order different from zero Differential market reaction Dummy economies of scale effect enactment of interstate entire 11-week period FDIC information hypothesis interstate banking legislation interstate mergers intrastate correlations large banks market model medium banks merger announcement merger proposal merging banks money center banks multiple bids number of banks number of potential out-of-state banks percent portfolio positive market potential bidders price of target reaction of bank reaction to takeover regression analysis reported in Table Reserve decision residual returns Return t-stat risk sample share price small banks stock price reaction stock returns surrounding the announcement synergetic gains target and bidding target banks target firms Texas banks unsystematic risk variables Virginia