Does Long-Term Performance of Mergers Match Market Expectations? Evidence from the US Banking Industry
Year: 2003
Type: article
Abstract: There is a paradox in bank mergers. On average, bank mergers do not create value, yet they continue to occur. Using cross-sectional analysis to examine 54 bank mergers announced between 1991 and 1995, I test several facets of focus and diversification. Upon announcement, the market rewards the mergers of partners that focus their geography and activities and earnings streams. Only one of these facets, focusing earnings streams, enhances long-term performance. Two other circumstances improve long-term performance: 1) when a merger involves a relatively inefficient acquirer and 2) when partners reduce bankruptcy costs.
Source: Financial Management
DOI: 10.2307/3666334
Author: Gayle DeLong
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2013456193