The short-term effect on shareholder wealth of banking mergers and acquisitions during periods of real economic expansion and contraction

Kerr, Gordon Roy

Title: The short-term effect on shareholder wealth of banking mergers and acquisitions during periods of real economic expansion and contraction
Creator: Kerr, Gordon Roy
Subject: Bank mergers
Subject: Consolidation and merger of corporations
Subject: Business cycles
Subject: Corporations -- Investor relations
Subject: Stockholder wealth
Subject: Rate of return
Date Issued: 2011
Date: 2011
Type: Thesis
Type: Masters
Type: MCom
Identifier: vital:1108
Identifier: http://hdl.handle.net/10962/d1013442
Description: Controversy currently exists over whether abnormal returns (ARs) are earned by shareholders of bidder and target banks through a Merger and Acquisition (M&A). The state of the economy in which the firms operate is often mentioned as a reason for firms engaging in M&As, however, the extent to which economies influence the ARs of shareholders is unknown. Following MacKinlay (1997), the aim of this study is to determine the average ARs earned or lost by shareholders of several banks around the world during an M&A. The results obtained may indicate that shareholders of bidding firms consider an M&A to be a wealth-destroying event irrespective of the state of the economy. It would seem that target firms’ shareholders consider M&As to be wealth-creating events when they occur during a period of real economic expansion. However, during periods of real economic contraction, target firms’ shareholders consider M&As to be wealth-destroying events. Thus, the state of an economy during an M&A can affect average ARs considerably.
Format: 102 leaves
Format: pdf
Publisher: Rhodes University
Publisher: Faculty of Commerce, Economics and Economic History
Language: English
Rights: Kerr, Gordon Roy

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