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It's the market power, stupid! Stock return patterns in international bank M&A

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  • Hankir, Yassin
  • Rauch, Christian
  • Umber, Marc P.

Abstract

This paper analyzes capital market reactions to international bank M&A. We investigate combined stock return patterns of targets, bidders, and their peers upon takeover announcement, and closing or withdrawal. We distinguish five common M&A hypotheses and relate characteristic and mutually exclusive abnormal stock return patterns to each hypothesis. We find that investors believe in gains through the exploitation of market power by the post-merger entity. In a multinomial logistic model we show that patterns related to market power significantly concur with large relative target size, intra-industry mergers, and increasing market concentration, suggesting a substantial lessening of competition through M&A. --

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Bibliographic Info

Paper provided by Frankfurt School of Finance and Management in its series Frankfurt School - Working Paper Series with number 129.

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Date of creation: 2009
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Handle: RePEc:zbw:fsfmwp:129

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Related research

Keywords: M&A; Banks; Event Study; Peer Returns; Market Power;

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  2. Ansgar Belke & Thorsten Polleit, 2005. "(How) Do Stock Market Returns React to Monetary Policy? - An ARDL Cointegration Analysis for Germany," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 253/2005, Department of Economics, University of Hohenheim, Germany.
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  5. Herrmann-Pillath, Carsten, 2009. "Kulturelle Hybridisierung und Wirtschaftstransformation in China," Frankfurt School - Working Paper Series 115, Frankfurt School of Finance and Management.
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  9. Herrmann-Pillath, Carsten, 2009. "A neurolinguistic approach to performativity in economics," Frankfurt School - Working Paper Series 123, Frankfurt School of Finance and Management.
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  12. Ansgar Belke & Thorsten Polleit, 2007. "How the ECB and the US Fed set interest rates," Applied Economics, Taylor & Francis Journals, vol. 39(17), pages 2197-2209.
  13. Wollersheim, Jutta & Barthel, Erich, 2008. "Kulturunterschiede bei Mergers & Acquisitions: Entwicklung eines Konzeptes zur Durchführung einer Cultural Due Diligence," Frankfurt School - Working Paper Series 94, Frankfurt School of Finance and Management.
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