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Consolidation of the European Banking Industry: Are Acquisitions Value Creating? Shareholder Wealth Effects of Merger & Acquisition Deals in the First Decade of the Euro, 1999-2008

Lawrence, Jack and Tommasini, Lorenzo Gabriele (2010)
Department of Business Administration
Abstract
In the past two decades the European banking industry has undergone an intense process of reshaping, fostered by a junction of reasons. Consolidation of the industry has been increasing at an accelerating pace. However, continental literature in the field is still not thorough or conclusive. While European banking M&As have been up to now judged as creating more value than their US counterpart, they have also shown a trend of decreasing returns in the last few years. This impression is confirmed by this study. Using an event-study approach, this paper analyses the short-term market reaction to 74 large banking M&A deals occurring in EU countries during the years 1999 to 2008. We find substantial abnormal gains for targets, slightly... (More)
In the past two decades the European banking industry has undergone an intense process of reshaping, fostered by a junction of reasons. Consolidation of the industry has been increasing at an accelerating pace. However, continental literature in the field is still not thorough or conclusive. While European banking M&As have been up to now judged as creating more value than their US counterpart, they have also shown a trend of decreasing returns in the last few years. This impression is confirmed by this study. Using an event-study approach, this paper analyses the short-term market reaction to 74 large banking M&A deals occurring in EU countries during the years 1999 to 2008. We find substantial abnormal gains for targets, slightly negative abnormal returns for bidders and small positive returns for the combined entity. These results were also found to be economically significant. Results obtained analysing type-classifying sub-samples show that markets value geographic and product diversifying deals of medium sized targets financed by cash (Less)
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author
Lawrence, Jack and Tommasini, Lorenzo Gabriele
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Bank mergers; Mergers and acquisitions; European banking markets, Management of enterprises, Företagsledning, management
language
Swedish
id
2169587
date added to LUP
2010-06-07 00:00:00
date last changed
2012-04-02 18:22:56
@misc{2169587,
  abstract     = {In the past two decades the European banking industry has undergone an intense process of reshaping, fostered by a junction of reasons. Consolidation of the industry has been increasing at an accelerating pace. However, continental literature in the field is still not thorough or conclusive. While European banking M&As have been up to now judged as creating more value than their US counterpart, they have also shown a trend of decreasing returns in the last few years. This impression is confirmed by this study. Using an event-study approach, this paper analyses the short-term market reaction to 74 large banking M&A deals occurring in EU countries during the years 1999 to 2008. We find substantial abnormal gains for targets, slightly negative abnormal returns for bidders and small positive returns for the combined entity. These results were also found to be economically significant. Results obtained analysing type-classifying sub-samples show that markets value geographic and product diversifying deals of medium sized targets financed by cash},
  author       = {Lawrence, Jack and Tommasini, Lorenzo Gabriele},
  keyword      = {Bank mergers; Mergers and acquisitions; European banking markets,Management of enterprises,Företagsledning, management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Consolidation of the European Banking Industry: Are Acquisitions Value Creating? Shareholder Wealth Effects of Merger & Acquisition Deals in the First Decade of the Euro, 1999-2008},
  year         = {2010},
}