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The value added by private equity in mergers and acquisitions by financial institutions

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  • Jennifer Brodmann
  • Charles Danso
  • Surendranath Rakesh Jory
  • Thanh Ngo

Abstract

We compare and contrast (i) mergers and acquisitions (M&As) by financial institutions (FIs) that had the involvement of one or more private equity firms (PE) with (ii) acquisitions with no private equity involvement. We find that the M&A announcement abnormal stock returns are higher for acquisitions with- than without private equity involvement. Likewise, the post-announcement long-term annual stock returns are higher for deals with PE involvement. These deals also produce higher operating performance, and their stocks exhibit less volatility in the months following the announcement after controlling for a host of confounding variables. Our results are robust to year fixed effects, industry (i.e. business line) effects, and self-selection bias.

Suggested Citation

  • Jennifer Brodmann & Charles Danso & Surendranath Rakesh Jory & Thanh Ngo, 2021. "The value added by private equity in mergers and acquisitions by financial institutions," Applied Economics, Taylor & Francis Journals, vol. 53(51), pages 5898-5916, November.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:51:p:5898-5916
    DOI: 10.1080/00036846.2021.1931657
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    Cited by:

    1. Chiaramonte, Laura & Dreassi, Alberto & Piserà, Stefano & Khan, Ashraf, 2023. "Mergers and acquisitions in the financial industry: A bibliometric review and future research directions," Research in International Business and Finance, Elsevier, vol. 64(C).

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