VALUE CREATION OF EUROPEAN BANK MERGERS AND ACQUISITIONS IN THE 1998 - 2007 PERIOD

• Authors: Teplý Petr , Stárová Hana , Černohorský Jan
• Languages of publication: EN

Abstracts

EN

The European banking industry has experienced profound change in regulation, technology and market structure over the last two decades. Since the late 1990s, a strong wave of mergers and acquisitions (M&A) and market consolidation process have been induced by the changing external environment. The aim of this paper is to find out whether M&A transactions in the European banking sector can be justified by creating value for involved banks' shareholders. For this purpose the authors conduct an event study examining value implications of 59 M&A transactions of listed European banks carried out between 1998 and 2007. Their findings suggest large value creation for the targets' shareholders. On contrary, significant value destruction is found for shareholders of the bidding banks. The net wealth effect for combined entities of targets and bidders is still significantly positive; therefore, they conclude that banking M&A have been successful in the observed period. Moreover, they present results for several sub-samples analysing differences in terms of value creation between domestic and cross-border deals, cash and equity-financed deals and transactions of different sizes.

Keywords

EN

BANK; EUROPEAN BANK; MERGERS AND ACQUISITIONS; SHAREHOLDER VALUE

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2010
• Volume: 58
• Issue: 5
• Pages: 457-470
• Document type: ARTICLE

Contributors

author

Teplý Petr

• Charles University in Prague, Institute of Economic Studies, Faculty of Social Science, Opletalova 26, 110 00 Prague, Czech Republic

author

Stárová Hana

author

Černohorský Jan

• Petr Teply, Karlova Univerzita Praha, Fakulta spolecenskych ved, Institut ekonomie, Opletalova 26, 110 00 Praha 1, Czech Republic

Identifiers

CEJSH db identifier

11SKAAAA100920